Real Home Costs

By Sherri Platt

You've just bought your home, finalized the mortgage and you're ready to let out that sigh of relief. No more time spent contemplating the mortgage or your initial down payment and monthly payments. It's a done deal.

Remember that while you may have your mortgage under control you will need to plan ahead to cover some of the other costs of home ownership. Living in and maintaining your home can be just as draining on your finances as the mortgage itself. Merely furnishing your dream can chip away at future hopes.

Colin Chow, a financial advisor at Dundee Private Investors says it is often a homeowner's enthusiasm for making their surroundings perfect that is their downfall.

20 per cent to savings. The remaining 70 per cent should go towards your fixed costs which include things like your mortgage and heating bills. He says that people find themselves in trouble when they spend money that should go towards their fixed costs on other things. Over time to pay those bills they will deplete their savings.

One of the easily overlooked fixed costs is property tax. In most cases months will pass between the excitement of closing and the arrival of the dreaded tax bill. It is easy to put off saving money for it. The bill can be especially large in the first year. Often the first bill you will receive is simply for the land before it was developed. A later assessment for the house will arrive. One option for avoiding the shock of a lump sum or several large payments too close together is to have your taxes deducted monthly. Be aware that while you will have a consistent amount to budget for, there may be other fees attached.

Another surprise for owners can be the jump in homeowner's insurance costs when going from an apartment to a new condominium or house. You may also need extra coverage for pricey items such as art, jewellery, or antiques.

As seasons change, so do your expenses. As fuel prices continue to rise heating costs have become increasingly unpredictable. Even if you have a fixed rate plan, be aware of when your actual consumption outpaces that amount. You may soon find that the rate has been readjusted to a higher amount or that you are suddenly responsible for a lump sum payment of up to five or even ten times your original rate. It can be a shock if you are not careful to pay attention.

Of course changing seasons may also mean other expenses. Are you going to clear your own snow, cut your own grass, and do your own landscaping? If not, budget for those seasonal expenses. If you are going it alone, remember you will need all the tools that go along with tasks.

"Money is like time. It slips away," says Derek Coomber of the Investment Planning Counsel of Canada. He suggests that homeowners map their finances using tax software. The programs allow for you to chart your expenses and bring a complete picture into view.

While most homeowners are aware of their expenses, they lose sight of where their money goes. No matter how organized you are, you will certainly want to add the finishing touches to make your new house or condo a home. Keeping yourself in line now may make getting that widescreen flat panel LCD TV a little easier in the future.