05 Feb Why Your New Home May Be More Expensive Than You Thought
Buying a home for the first time is scary, but there’s something even scarier: hidden costs!
Hi there, Acadeo friends! In today’s edition of real estate advice we’ll be talking about something that’s scarier than Halloween – additional expenses that come with purchasing your new property. It’s unavoidable that you’ll have to shell out more money than you initially budgeted, but there are ways to lower these costs, or at least be able to prepare for them when it’s time to pay up.
Here are some common hidden costs that come with buying real estate.
HOME MAINTENANCE AND REPAIRS
It’s not a surprise that home maintenance costs are an added expense when moving into a new home, but it might surprise you just how much you’ll be expected to pay in order to get your property ready for living in.
This is why it’s very important to inspect your home thoroughly before you even think of committing to buying it: some damages run deep, and in order to fix it, you might have to tear down half of the whole structure, if not rebuild it completely!
Consider yourself lucky if all that’s needed is a few new light bulbs and some tighter bolts and screws here and there. But if you end up with a home that needs its electrical wiring completely rewired, for example, you might want to reconsider before signing on that deed of sale.
UTILITIES AND VARIOUS PERMITS
Even if the home is well-maintained and requires no repairs, it’s still possible to rack up some expenses just from the utilities and various permits you’ll need before you move in.
For example, in some neighborhoods, you need to have a permit to have pets, especially if you’re going to let them roam around in your property without a leash. You may also require a parking permit for subdivisions with designated parking space.
In many places, it’s also a common requirement to get a permit for constructing a fence around your property, as well as any other construction work that will create loud noises, disrupt traffic, or make use of the sidewalk or road (such as cement truck parking).
CLOSING COSTS AND PROPERTY TAXES
You’ve found the house of your dreams – congratulations! Now it’s time to seal the deal, and your real estate agent suddenly informs you that you’ll have to pay 50,000 pesos in additional fees to close the transaction. Wait, what?!
While it’s not as common in the Philippines as it is elsewhere in the world, closing costs are fees that can amount to up to 5% of your property’s declared value and are paid separately from the amount that goes to your developer, property owner, or real estate agency.
These fees can include legal fees for notarization and transfer of deed or title, legal and material insurance (the former to protect both parties in case the sale doesn’t push through, and the latter to insure the property itself), and professional fees for utility or property inspections.
The list could go on and on, and if you’re not paying attention, you could be paying up to 100,000 pesos (or more, if your property is very highly valued) on fees alone. Yikes!
The list is by no means comprehensive – these are just the most common expenses that often surprises many first time home buyers. While not always hidden or undisclosed, many buyers neglect to account for these expenses or put them off for much later, which can affect the quality of life on their property.
Mortgages are expensive. Unlike credit cards and installment plans, a mortgage loan is a long-term commitment that will affect your expenses for many years to come. That’s why it’s important to set aside more than what your planned budget will be – you never know what unforeseen expenses will come up!
Until next time!