You need to work out a budget so you know what your current situation is and how much you might be able to afford to spend on your new home. This means you can look at houses within your price range.
Your budget is basically the money you have coming in (e.g. through wages, salary, investments or any other income sources), minus the money going out (e.g. for food, transport, insurance, clothing, etc). How much you can afford to spend on a home is the surplus after all your other expenses have been accounted for.
It is worth working this out early and keeping a copy of it, as you will need to use this information again when you apply for a conditionally pre-approved home loan.
While you’re doing these figures, it’s worth erring on the side of caution. As we all know, miscellaneous expenses can add up. If you need help to calculate your expenses and work out your budget, then contact us.
We have two worksheets to help you work out your budget, one is a Budget at a glance (PDF) and the other is a Detailed budget worksheet (PDF). You can also use our online budget planner calculator to help you work out your budget.
Costs of selling and buying a home
The costs of purchasing a home and the ongoing expenses of running it need to be reflected in your budget. You should be aware of most of the ongoing expenses but your new house may have some different expenses e.g. if you are buying an older home you may need to factor in more maintenance costs. It can often end up costing you more than you expect.
Some of these one off expenses may include:
- Real estate agent fees
- Legal fees to sell
- Legal fees to buy
- Builders report
- Valuation
- Moving costs.
Other ongoing expenses may include:
- Insurance
- Repairs and maintenance
- Rates.
Use our handy worksheet (PDF) or our online calculator to help you work out all these additional costs.
Ensure that your current surplus allows you enough money to cover these costs or that you factor this in to how much you want to borrow. It may be worth adding them to your budget.
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The content on our site is for information only. You should obtain professional advice relevant to your circumstances. Our lending criteria, terms, conditions and fees apply to all loans. Contact us for more details.