Annual Maintenance Costs: Ideally, set aside 1-4% of your home’s value each year for regular maintenance such as landscaping, gutter cleaning, and pest control. For a R1,000,000 home, this translates to R10,000-R40,000 annually. The exact amount will depend on your budget, the property’s type, condition, and size. For instance, a new two-bedroom apartment will require less upkeep compared to an older four-bedroom house with extensive grounds.
Emergency Repair Fund: It’s wise to have a separate fund for unexpected repairs and replacements. While there is no fixed amount, this fund should ideally cover significant repairs, such as replacing a geyser.
Repair Budgeting Rule: Over time, plan to spend 1-4% of your home’s value each year on general repairs and replacements as components like roofs, appliances, and mechanical systems age.
Many people realize the necessity of having a maintenance and repair fund only after facing a major issue that strains their finances for months. Even minor problems, like a broken curtain rail or door handle, can add up. Therefore, starting to save early is crucial, even if it means postponing some renovations or new furniture purchases.
Some budgeting strategies to help you save:
- Automate Savings: Set up automatic monthly transfers to dedicated savings accounts for maintenance and repairs. This keeps the funds separate and helps them accumulate more quickly.
- Assess Major Systems: Determine the age and condition of your home’s key systems, such as the roof, to better estimate when replacements might be needed.
- Research Costs: Look into local cost estimates for common repairs, like roof replacements or geyser repairs, to plan your budget effectively.
Some Ways to reduce future repair costs:
- Create a Maintenance Schedule: Develop a seasonal and annual maintenance plan to keep up with minor issues before they escalate.
- Address Minor Repairs: Don’t ignore small repairs or routine upkeep; neglecting them often leads to more significant and expensive problems later.
- Avoid Shoddy Repairs: Steer clear of quick fixes by inexperienced contractors or DIY repairs if you lack the expertise. Poor work may need to be corrected sooner and could deter future buyers.
- Ensure Adequate Insurance: While standard homeowner’s insurance doesn’t cover routine maintenance, make sure you have sufficient coverage for risks like fire, storm damage, and theft.
- Don’t Rely on Home Equity: Using home equity to cover repair costs undermines its value as a long-term investment. Instead, build a separate repair fund.
In the end, buying a home is a long-term financial commitment that goes beyond just your mortgage payments. By budgeting for maintenance and repairs from the outset, first-time homebuyers can be better prepared for every phase of homeownership.