Are you done house hunting? Have you found the perfect house that suits your needs, requirements and taste? If so, it is time to get down to the less exciting task – funding your house. We all know that the most common and probably easiest way is to get a mortgage loan. What we do not know is how much to apply for. If the house costs 25,000 AUD, do not apply for the exact value. That is not only risky but also not the brightest idea. When purchasing a house, you will have to pay for a lot more than the price of the house. Consider the payment for the removal company, insurance, utilities, etc. Moreover, if you are purchasing a second-hand home, you will have to pay for repairs and renovations as well. This is why it is important to make use of a home loan calculator and various other methods to make a precise calculation of your expenses. In this case, the information given below will prove to be highly useful.
Figure out how much your paycheque can afford
Even though you might be enjoying a lucrative income, do not base your calculations on it. Your income will not be what they said it would be after all the taxes are charged. Your contribution to the household will be much lower once the taxes are paid for. Therefore, talk to your HR or accounts department to ensure the right amount that falls into your bank balance each month. You could also make use of an online pay check calculator for this purpose. If you are a business owner, take a good look at your statements and monthly records to come to a conclusion. The final amount that you get is what you can afford to spend each month for your day-to-day expenses.
List your monthly expenses
Your household expenses play a pivotal role in your mortgage amount, especially your interest rate. These include the bills that you will have to pay each month such as insurance, existing car loans , electric bills, academic fees, transportation costs, etc. If you do not maintain a budget for your monthly expenses, refer to your check book, credit card and bank statements. These will give you an ideas as to how much you regularly spend in a month. It is important to understand the differences between these expenses namely the necessary, optional and necessary but flexible expenses.
Calculate post-purchase expenses
It is never too bad to pre-plan and be ready. Calculating your expenses once you become a house owner will enable you to get some closure to the situation. The spending will mainly depend on the type of house you purchase. For example, if you are buying an old house since it is cheaper, you will have to pay for the renovations which is the not the case when you buy a brand new house. When purchasing a house, you will have to take the hazard insurance and property taxes into consideration as well. Make sure you pay all you bills in time, missing payment can lead you to bad credit ( www.badcreditdeal.com.au )
Figure what expenses to eliminate
When moving into a new house, you will be moving to a new neighbourhood. Thus, there will be certain financial advantages that will reduce the cost of your daily expenses. For example, if you are moving for work purposes, you might sometimes be shifting to a location which will be in a closer geographical proximity to your workplace. This will reduce your daily transportation costs and a significant part of your daily expenses to a great extent. The new location can be a much more cost-effective place than your previous place of living. For instance, if the area offers very good education in local schools, there is no need to send your children to private educational institutions. Even slight changes in daily groceries will enable you to save quite a lot in the long-term.
Once you have figured out all these expenses, you will be left with an amount which is exactly what you will be able to afford. Although it might be hard to estimate these expenses in an accurate way due to lack of experience, it will give some idea as to what to look out for. If you are unable to do it on your own, seek help from industry professionals or online loan calculators.