Buying your first home is one of life’s most exciting milestones, but it also comes with a new set of financial responsibilities and, while costs like your monthly bond payments were likely top of mind during the house hunt, budgeting for ongoing maintenance and inevitable repairs is something many first-time buyers overlook.
“After years of renting with a landlord to handle everything from routine upkeep to major repairs, new homeowners can easily get blindsided by just how expensive it is to maintain a property and you can find yourself in a financial bind the first time an expensive repair or replacement is needed,” says Claude McKirby, Co-Principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.
“Homes are a major investment, and like any asset, they require regular upkeep in order to preserve their value. They will also incur repair costs over their lifetime so it’s essential to budget properly for the inevitable.”
Whilst every home and situation will differ, McKirby says that there are general guidelines that financial advisors recommend new homeowners follow:
Annual Maintenance Costs: If possible, set aside 1-4% of your home’s value annually for routine maintenance like landscaping, gutter cleaning, pest control, etc. For a R1 000,000 home, this equals R10 000-R40 000 per year. How much you save will not only depend on what you can afford but also the type of property, it’s condition and size. Obviously a newer two-bedroom apartment will require much less upkeep than an older four-bedroom house with large grounds.
Emergency Home Repair Fund: Additionally, it’s a good idea to save a separate sum specifically for unexpected repairs and replacements. There is no set amount, however, the fund should ideally have enough for a major repair like replacing a geyser.
Repair Rule of Thumb: Over time, you can expect to spend 1-4% of your home’s value per year on general repairs and replacements as components like roofs, appliances, and mechanical systems wear out.
“Many people only realise the importance of having a maintenance and repair fund after they have had to deal with a major issue that leaves them in a financial pinch for months afterwards.
“The fact is that, whether it’s a minor issue like a broken curtain rail or door handle or more serious like the geyser, you can be sure that something will break, even if you’ve bought a new build so saving from day one is paramount, even if it means delaying some renovations or new furniture purchases.”
McKirby offers the following budgeting tips to help you save:
- Automate transfers monthly into dedicated savings accounts specifically for these purposes so the money is separated and builds up more quickly.
- Establish the age and condition of your home’s major systems like the roof so you can better estimate replacement timelines.
- Do some research to get accurate local cost estimates for common repairs like roof replacements, geysers, pool pumps etc.
“Budgeting for maintenance and repairs can be a challenge initially with all the other new homeowner expenses so it’s very tempting to delay putting money aside and hope for the best but there almost certainly will come a time that you are very glad you did have some money squirreled away.”
McKirby says that there are also a number of things that homeowners can do to minimise repair costs down the line:
Draw up a seasonal and annual maintenance schedule: This way you can stay on top of things and catch minor issues before they become major repairs.
Don’t Neglect Small Projects: Skipping minor repairs, and general upkeep because they seem minor usually leads to much bigger and costlier problems down the road.
Don’t Cut Corners: Avoid quick fixes from inexperienced contractors or attempting major repairs yourself if you lack the proper skills – you’ll probably need to repair the problem again sooner rather than later and future homebuyers will smell out shoddy work.
Don’t Underinsure: While homeowner’s insurance doesn’t cover standard maintenance, make sure you have adequate coverage to protect your investment in case of fire, storm damage, theft, etc.
Don’t Cash Out Home Equity: Tapping into your home’s equity to cover repair bills defeats its purpose as a long-term investment asset. Build your repair funds separately.
“At the end of the day, buying a home is a long-term financial commitment that extends far beyond your mortgage payment,” concludes McKirby, “and by budgeting properly for maintenance and repairs from the very start, first-time homebuyers can ensure they’re financially prepared for every stage of homeownership.”