If you take a look around your neighbourhood, you’ll probably see many different homes — and odds are some of those homes will look better than others. Every homeowner has their style when it comes to maintaining their humble abode, but one thing’s certain: taking care of your home as it ages is going to cost you. If you’re diligent about staying ahead of issues, you may pay a little more out of pocket every month, but in the long run, you may wind up saving thousands.
Depending on how a home’s been cared for, you can expect to pay about one per cent of your home’s current market value in annual maintenance expenses. The good news is there are ways to think about saving and budgeting for the inevitable repair or replacement of your home’s big-ticket items.
Do you know how much to budget for home maintenance? We’re here to help you narrow down that elusive number so you can manage your home’s budget with greater certainty.
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The Importance of Home Maintenance
Of course, you want your home to look great. Balancing that ideal with your finances can be another story. That’s why a solid budget is so important when it comes to managing house maintenance costs. If you’ve put aside cash to spend on upcoming projects — and saved up with each paycheck — you’ll likely find getting the work done is possible. You’ll be able to boost the value of your house and its curb appeal, too!
What Is Included in Home Maintenance Costs?
By placing a certain percentage of your home’s value into savings every year, you’ll have a reserve for big-ticket items when the time comes to make a major purchase. Because appliances will eventually need to be swapped out, and sooner or later, the roof will need replacing, having that savings in place can make a big difference. You’ll be better prepared for unexpected problems as well. Here are a few items that will likely need your attention around your home:
- Lawn care
- Plumbing issues
- Old roof
- Cracked tiles
- Aged ceiling fans
- Unaligned doors
- Repainting walls
What Impacts Your Average Monthly Home Maintenance Costs?
It’s fair to say that forecasting the future is next to impossible. But you can weigh a number of important factors together and emerge with an idea of what your yearly house maintenance budget will need to be. Here are a few key factors that affect your home’s maintenance budget:
Where your home is located, the physical position of your home — relative to hills, water flow channels, flood plains and more — has an impact on how well a home will fare over the years. For instance, you can expect higher yearly home maintenance costs for homes that see large amounts of water in the basement every year.
Your home’s condition. Homeowners that take pride in their home and do what they can to keep it running smoothly benefit in many ways. They may spend a bit more upfront, but their yearly home maintenance costs are more predictable as a result. When older homes have been well-maintained, they typically have furnaces that last longer, too.
The age of your home. As your home ages, it’s going to need upkeep and repairs. The age of a home is a big predictor in its overall health. Average repair and maintenance costs can be minimized in older homes by hiring professionals to check in on your appliances and systems regularly. Homes built 30 to 40 years ago will usually require more spending to maintain than homes built within the last decade.
How Weather Impacts Your Home Repair Budget
Local weather can take its toll on your home. Take a look at the various ways you’ll spend on your home depending on the seasons and region where you live.
Winter climates can accelerate home maintenance expenses. Physical stressors on your home like temperature changes, ice and snow can impact your home’s structure. When insulation around your foundation is lacking, pipes are more likely to burst in frigid temperatures. If your gutters aren’t cleaned out after the leaves have fallen, they’re more likely to create ice dams.
Humid regions can affect your home’s property maintenance costs. Coastal areas and humid regions can harbour conditions where mould and mildew can flourish. Frequent rainfall or exposure to tropical storms can beat up your roof as temperatures shift from very hot and sunny to wet and cool all year long.
Mild weather can help your home to last longer. If the weather’s just fine most of the year, your HVAC systems won’t need to be running — and they’re likely to stay in better repair as a result. The rest of your home’s systems are more likely to stay in better shape, too.
The real cost of your home
You need to know about those hidden costs so that you can:
- Gauge whether a seemingly affordable home may break your budget.
- Set aside money for these expenses to avoid going into debt.
- Develop a backup plan in case your savings aren’t enough to cover the bills.
You probably know that in addition to your mortgage you’ll pay property taxes and insurance. In addition, you may pay homeowners association fees and may face higher utility bills compared with what renters typically pay.
But even these substantial costs can be dwarfed by your expenses for repairing, maintaining and upgrading your property. One study commissioned by The Wall Street Journal back in 1998 found the cost of maintaining, repairing and upgrading a typical home to current standards over 30 years was almost four times the purchase price. That estimate may be high, but the financial planners I interviewed agreed that homeownership costs inevitably exceed first-time homebuyers’ expectations.
Budget for repairs even before you buy
Of course, what people should spend and what they do spend runs the gamut. Some shell out for top-of-the-line remodels that cost hundreds of thousands of dollars, while others neglect the most basic maintenance and repairs (which often ends up costing them a lot more down the road).
Where you live also matters a lot in terms of what you pay. Replacing a roof typically costs more in high-cost cities than elsewhere, for example. Other variables that affect your costs include:
- The condition of the house when you buy it.
- The quality of the materials used to build or remodel it.
- Your ability and willingness to do some things yourself — although DIYing can cost more than it saves if you mess up projects beyond your skillset.
- Your location’s climate (exterior paint that could last ten years in a place with mild weather might look shabby after five years’ exposure to extreme heat or cold).
You can get some idea of the outlays facing you by hiring a good home inspector before you buy, someone who can give you an idea of the remaining life expectancy of the house’s various components and a rough estimate of how much they’ll cost to replace. It may become apparent that a bargain house will turn into a money pit, while a better-maintained home is worth the extra money.
Once you buy, though, you should plan to put aside a sizable amount each year to cover the inevitable expenses.
How to Budget for Home Maintenance Costs
Some first-time homeowners are shocked to learn that the cost of homeownership doesn’t stop at the closing table. Here’s how to plan for surprises.
After shelling out thousands of dollars for a down payment, mortgage fees and other closing costs, some first-time homeowners are shocked to see that the cost of homeownership doesn’t stop there.
Unlike renters, homeowners have a vested interest in maintaining the property, so it’s important to plan for annual checkups as well as surprises, like a broken appliance or leaky roof. Find out what maintenance tasks you’ll need to perform each year.
Build a reserve.
Set aside 1 per cent to 3 per cent of your home’s purchase price each year in a separate saving account specifically for home maintenance and repairs. For example, if your home cost $300,000, set aside at least $3,000 each year. Make one large deposit or spread the amount out in monthly deposits.
Assess your needs.
Prioritize projects and work within your budget. Increase your budget as needed for bigger projects. For instance, if you know the furnace needs to be replaced, get an estimate and start saving for it.
Check out our Melbourne home repairs to help you to build your dream house.
Minimize gas and electricity costs by using energy-efficient appliances and light bulbs.
Do it yourself.
Depending on your level of comfort with a hammer and drill, consider doing minor repairs around the home yourself.
Use credit wisely.
Cut expenses and save money first. Avoid opening new credit cards or getting a home equity loan to fund major remodelling projects.
Calculating How Much to Budget for Home Maintenance
So, how much should you budget for home maintenance costs? There are a few good rules-of-thumb to consider that can help you sock away cash for a day in the future when you’ll need it.
The 1 per cent rule
There are many ways to consider saving up and budgeting for home maintenance costs. The 1 per cent rule is a good standard because it’s so easy to remember. Just put aside 1 per cent of the total purchase price of your home for home maintenance repairs. A $250,000 home would require you to save $2,500 annually or about $209 per month.
It’s a rough estimate that doesn’t consider labour costs or materials, and other factors can contribute to this base price.
The square foot rule
Budgeting for the eventual breakdown and replacement of major home systems like a new roof or replacing a sump pump may not be easy, but it is possible. Suppose you’re wondering about how to estimate property maintenance costs. In that case, the square foot rule can be helpful, and it’s another really easy way to put money away for repairs and home maintenance.
Budget about $1 for every square foot of livable space, every year, for annual home maintenance costs. And this rule is also applicable for estimating new home maintenance costs. So, a 2,500-square-foot home would require a $2,500 budget annually or about $209 per month.
Set aside 10 per cent
Another great way to budget for home maintenance is to put away 10 per cent of your main monthly expenses every month. That’s 10 per cent of your mortgage, 10 per cent of your property taxes and 10 per cent of your insurance costs placed into a savings account every month.
Suppose you’re spending this much every month:
- $1500 on mortgage
- $350 on taxes
- $200 on home, car and life insurance
Ten per cent of each of those figures is 150 + 35 + 20, or a monthly savings plan equating to $205. Estimating your annual home maintenance costs can be difficult, but saving up that cash doesn’t have to be.
Where to stash home-repair money
I recommend keeping this money separate from your emergency fund, which should be earmarked for job loss or other big, unexpected expenses. The costs of homeownership may not be entirely predictable, but they are inevitable, so you should save for them as you would any other big bill.
Another recommendation: Set up a home equity line of credit as soon as you can. This can be a backup source of relatively inexpensive funds in case a repair exceeds what you’ve got saved. Don’t use the money for other purposes, such as vacations or cars. The key is to leave it unused, so it’s there if you need it.
Some sellers offer home warranties to buyers but don’t expect these contracts to be a silver bullet, warns Jeanie Schwarz, a personal financial planner at NerdWallet. You may face long wait times and multiple visits from repair technicians before equipment is repaired or replaced, Schwarz says.
And home warranties typically don’t cover everything, says financial planner Kathryn Hauer of Aiken, South Carolina. Hauer has a warranty for her home but notes that neither home warranties nor homeowners insurance cover drainage problems, roof wear or water leaks, among other issues. Such problems “can cost a lot of money that the homeowner hadn’t planned to spend,” she says.
It’s a home, not an investment.
The high, ongoing costs of homeownership are why financial planners typically discourage clients from viewing their residence as an investment.
Historically, homes typically appreciate at a rate that matches inflation, according to housing expert Robert Shiller. The costs to insure, maintain, repair and upgrade real estate mean you’re probably losing ground over time (although paying down a mortgage can be viewed as a kind of forced savings).
That doesn’t mean homeownership is a bad deal. It just means you need to be prepared.
“Owning a home can be an enjoyable lifestyle decision as well as a smart financial decision over an extended period of time,” Becker says. “The more you anticipate the potential costs, the more likely it is to be a positive experience on both fronts.”
How long do things last?
Here’s what the National Association of Home Builders estimates as the life span for various housing components:
- Roof: Typically 20 to 30 years, depending on the material, although slate, copper, clay or concrete roofs have an expected life span of more than 50 years.
- Flooring: Carpets last eight to 10 years, linoleum 25, vinyl up to 50; wood, marble, slate and granite can last 100 years.
- Decks: About 20 years “under ideal conditions.”
Consumer Reports, meanwhile, says to expect the following life spans:
- Oil furnace: 20 years.
- Gas furnace: 18 years.
- Electric furnace: 15 years.
- Central air conditioner: 15 years.
- Gas range: 15 years.
- Electric range: 13 years.
- Refrigerator: 13 years.
- Dryer: 13 years.
- Freezer: 11 years.
- Washing machine: 10 years.
- Dishwasher: 9 years.
Home Maintenance Checklist
Observe Your House
Observing is not figuring out. It is not an analysis. Observing is a wonderment. It is open and receptive. It is true learning. Once you can observe potential problems around your home, then what? You can learn where to look and for what. Below are nine quick areas to observe.
- Siding at lower levels, deck connections, under windows and doors, around the chimney.
- Sagging or cracked masonry stoop, steps, or foundation; erosion.
- High-stress windows and doors, sills, and caps, i.e., those without overhangs or with southern exposure or without storms or gutters.
- Trim around the chimney, under roof valleys, under poorly hung gutters, at corners or ends, discoloured or mildewed wood.
- Water that collects or runs toward the house.
- Floors that are soft, unstable, or discoloured near exterior doors; in bathrooms around toilets and tubs; cracking kitchen tiles.
- Discoloured or peeling paint inside or out.
- Cracks in walls, especially emanating from window and door corners.
- Basement or crawlspace water or sweating ductwork.
Use all of your senses to observe. Look for texture and colour changes. Look for things, not level or plumb. Look for cracks, water, bugs and ants, etc. The eyes can spot much, but also pay attention to your feet. When walking, does the floor seem unstable or soft? Listen for noises or squeaks. Touch discoloured areas to see if they are damp. Smell for musty odours. Does anyone start sneezing or have difficulty breathing or get a headache when in a certain area?
The dust has the potential to be a serious health hazard. Not only does it contain the skeletons and feces of dust mites, which cause allergies and aggravate asthma, but it may also carry chemicals that have come off items that have been in the home, such as lead and pesticides. When dusting, use a dampened cloth so that the dust will better adhere to the cloth. Items such as throw rugs should also be routinely washed.
For extra help, contact a cleaning pro in your area.
Keep Floors Vacuumed
Carpets should be vacuumed no less than twice a week. The most effective vacuum cleaner is one that comes with a HEPA filter. Vacuuming will not only help to remove dust, but it will also remove pet dander, fur, dirt and other contaminants that could sicken persons inside the home. When vacuuming, move and vacuum behind furniture and other objects. To help keep dirt levels and other harmful substances out of the house, remove shoes before entering. Shoes can track anything that has been stepped on into the home, such as dirt, feces, chemicals, and more.
Check the Exterior
Inspecting the exterior of the house is an important part of all home maintenance plans. Look for signs of wear and tear and make the appropriate repairs. Check for decay or damage to the trimming around doors and windows. Repaint and repair home siding and trim that has become loose or where paint has begun to peel.
Check Windows and Wall
Both windows and walls can be a source of health problems if not well maintained. Inspecting and repairing both areas should be a part of a person’s spring and fall home maintenance checklist. Prevent drafts and excess moisture from entering the home by replacing or repairing any caulking around the home’s doors and windows. If windows are cracked, they should be replaced or repaired. The walls in the interior of the home should also be carefully checked for evidence of termites. Check that screens are intact to ensure that certain types of pests are being kept out.
Keep Moisture Under Control
Moisture in the home results in a mould which can cause numerous health problems. In addition, moisture is also attractive to rodents and insects. To reduce these risks, make any repairs to leaky sinks or pipes as quickly as possible. Use exhaust fans in the kitchen and bathroom to reduce humidity while cooking or showering in the absence of exhaust fans, open windows. Leaking roofs should be repaired as quickly as possible.
Keep Air Filters Clean
One often overlooked aspect of home maintenance involves the house air filtration system. Dirty or clogged air filters can result in damage to air conditioning systems, or even in extreme cases, a breakdown or fire. Filters in portable air filtration systems are also vulnerable to becoming dirty or clogged. Clean air filters can help keep pollution out of the air. Fortunately, keeping air filters clean is as easy as taking them out and either replacing them or cleaning them. Cleaning filters can be as simple as removing them and shaking them clean, while in other cases one can wash them or brush them off. It is best to clean any air filter outside to keep dirt from circulating in the house. This should be done once a month.
Maintain Heating and Cooling Systems
Heating, air conditioning and other types of climate control systems work by circulating hot or cold air through the house. As a consequence, they can become a major potential conductor of pollution in the home. Periodic cleaning of vents and the cleaning or replacement of filters is an essential part of a healthy home maintenance checklist. Regular maintenance of climate control systems is also necessary in order to prevent performance losses or even breakdowns.
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The Guts of the Home
There’s a lot of essential equipment and technologies that need regular upkeep in your house. Furnaces and water heaters need regular inspection and maintenance. You will also have to pay for general repairs, and some opt to pay for housekeeping.
A good rule is that the annual maintenance of a home will cost one per cent of the purchase price. If your home costs $500,000, then you should budget $5000 for ongoing maintenance. Anything leftover can roll into the budget for the following year. Some prefer to calculate maintenance costs per square foot. The rule here is to budget $1 per square foot. A 1,000 square foot home would conceivably cost $1,000 in maintenance.
For maintenance, repairs, and upgrades, cash flow is essential. A home equity loan is a proven way to leverage your equity into maintaining or increasing the value of your property. If cash flow isn’t an issue, then be sure to properly budget.