Very few people stay in their starter home forever. Most of the time – whether it’s because of a growing family or a growing income that allows you to purchase something better – homeowners opt to move to a larger abode.
If you’re finding yourself in this situation, keep in mind that with a larger home comes larger costs. Below are just a few things to consider when you’re determining how much more house you can afford:
Unless you’re moving to a significantly less expensive area, chances are you’re going to require a larger mortgage as your home’s square footage increases. You can opt for a higher amortization to keep your monthly payments low (think 25 years), but this will also increase the amount of mortgage-paying years you have left.
2. Regular Maintenance (lawns, cleaning, snow removal)
This will be a particular shock if you’re moving from a condo to a house. Lawns, gardens, snowy driveways – these all need to be maintained. Also, the bigger the house, the more you’re going to have to clean (if you’re into that sort of thing). Whether you hire people to perform these tasks or you opt to do them yourself, you’re either looking at more money or more time spent on them.
3. Property taxes
Again, unless you’re moving to an area that has lower taxes, chances are you’re going to be paying more for a larger home. Find out from your Realtor roughly what the taxes are in your ideal neighbourhoods, and factor this into your budgeting before you start looking.
Bigger house means more rooms to heat – and cool. You may also have to pay for water, sewage and other costs such as water heater rentals.
If you’re already living in a house, this likely won’t be an issue because you’re used to the threat of unforeseen maintenance issues. If you’re moving from a condo, however, it’s important to note that you’re no longer paying maintenance fees for a reason. If something goes wrong, you have to foot the bill yourself. Make sure you have a reserve fund ready.
6. Home insurance
With a bigger home comes a bigger home insurance payment. ‘Nuf said.
Depending on where you’re moving to, some of these costs might be offset. Particularly if you’re moving closer to work – which will likely lead to lower gas bills and car insurance. If your new home is newer, and more energy efficient, you may not notice a huge difference in utility bills. And if you’re moving out of a larger city, your cost of living might decrease all around. Make sure you figure out roughly how much new house you can afford before you start looking. There’s nothing worse than finding your dream home only to realize it’s going to make you house poor.