10 steps to Create the perfect home-purchasing Plan

The most important investment for most people is their home. It is where you hope to see their future, have tax benefits, and when you finish paying down the mortgage, a source of wealth for the next generations.

The following 10 guidelines assist you in the operational and financial preparations of your home purchase. Determining your housing expenses is a critical step in your budget planning. Financially, you will need to figure out if you can afford to buy the house and afford to own it on an ongoing basis. Operationally, you want to see that the environment and surroundings match your lifestyle and future goals. So, let’s start:

Your Home-Purchase Plan

 

1. Choose the neighborhood

As mentioned earlier, when searching for a house, the first stage is choosing the area where you want to live for the next few years. A piece of advice from a friend or a colleague who personally knows the neighborhood could be priceless. What are the upsides and, importantly, the downsides that you need to be aware of? The more thorough you are the better the process will be.

 

Draw 3 columns divided into "Relevant", "Plausible", and "Irrelevant". Ask yourself questions like, what are the nearby schools (international or local)? Does the area have a good public transportation connection? How long does it take commuting to work? And so on. Eliminating the irrelevant neighborhoods will help you in the future make quicker and more efficient decisions. 

2. Select the type of house

The second step you need to take is deciding what kind of a house you want to live in. As you already have experience with at least one rental place so far, the choice is whether it would be a house or an apartment. Some people must have their sunny garden to invite friends for BBQ, and some prefer the top floor balcony with more privacy. It is all a matter of prioritizing. Doing that will eliminate a big deal of houses and keep you focused on your goal.

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3. Go out into the field

After doing that, the next thing is actually to go there and feel the place in person. Relying on recommendations is very useful. However, you might find some specs that do not align with your values or expectations. Preferably going a multiple times, for instance, once in the morning, then evening and then during the weekend.

Here's another great tip we recommend to our clients! Go to the supermarket in the chosen neighborhood during the day. There you will get a good idea of who lives nearby and how comfortable you feel. 

Once you have decided about the location and the type of your dream home, it is time to start viewing houses in real life. There's a tremendous difference between what you see in photos than in real life.

4. Start viewing houses

From experience, home-buyers obtain insights after their first viewing and may even change some assumptions they had before. Furthermore, keep in mind that the sellers have no intention to emphasize the flaws of the house, and therefore, visiting the place and check it by yourself is crucial. To learn more about what are the things that make an attractive offer, read here.

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5. Reserve an amount of at least 3 months of living expenses.

Transitioning from a renter to a homeowner entails the chance of having unexpected expenses increases. Establish a cash reserve to cover your nondiscretionary expenses, such as food, clothing, utilities, and insurance, if your income takes a sudden hit or if you need to make an extensive home repair.

 

Be ready for situations like late house transfer or renovations before moving in, which require you to pay both for the months you rent your current rental place and the first mortgage repayments.

If you are a two-income family with stable employment, a three-month reserve is adequate. However, if you are self-employed or if only one spouse works, a six-month sum is advisable.

6. Estimate your total housing costs.

A rule of thumb in money-borrowing for houses suggests that the total housing expenses costs should be no more than 28% of your gross annual income.


For example, if you have a monthly income of €8,000 (€96,000 per year), your housing costs should not exceed €2,240 a month. Include the mortgage payment, utility consumption, house insurance, taxes, and association fees, if applicable.

 

7. Consider ongoing maintenance expenses.

On average, you will spend 0.5% of the value of your home on maintenance expenses. For example, for a €500,000 house, you should plan for maintenance costs of approximately €2,500 per year.


However, this does not mean that you may incur this expense every year. Some years you may spend more on maintenance costs than others. Other factors include the condition of the hose, its age, and the building materials.

 

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8. Know how much you are going to pay out of your pocket.

Another aspect that home-buyers should take into account is the external professionals they use to support the process. The home buyer is directly paying their fees, for example, the mortgage advisor, home inspector, buying agent, etc.

Although paid out of the buyer’s side, services like mortgage advisor, taxation rapport, and the notary costs for the mortgage deed and cadaster details are tax-deductible from the annual income. Costs that consequently return. Bottom line, it would be wise to have liquid funds to pay the professionals you hire and avoid instances where you save important services just because you had no money aside. Hiring the right experts to guard your interest could save you much more in the long run. Read this to get better insight into the prices of the external experts.

9. Estimate the costs for furnishing your home.

Houses in the Netherlands are often delivered empty from moveables unless noted otherwise in the list of matters attached to the purchase agreement. In most cases, you can ask your buying agent to check that list, so you know exactly what stays and what you need to buy.

 

Calculate and prepare the delivery based on the transfer date. Take into account that it might take some time, based on the time of the year and the seller. Try to expect unplanned incidents that will cost you unwanted extras. 

10. Renovation costs. 

This assignment is chronologically last in the list of financial guidelines, as it could widely vary between houses and therefore makes it hard to prepare. However, preparing 3 contingency plans in different volumes of renovation could help home-buyers, before they make an offer, avoid struggling with last-minute cost estimations, and clearing whether they could afford the house in addition to the renovation expenses or not.

Read what to know before starting your renovation, and how to properly calculate the project.

In this hot market, when many people buy houses or upgrade them, finding a good contractor who is available when you need them is hard. In the leading agencies, clients get precedence from trusted colleagues from the industry to ensure their goals are a top priority. See here the supplementary services you can use after buying your house.

Do you have any further questions?

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