Many buyers, especially first home buyers, ask themselves: how much should I spend on a house?

Assuming you’re borrowing money to buy your house, the answer depends on:

As a rough guide, your total loan repayments should be no more than 40 per cent of your total income. To get a better idea of what you should spend on a house, sit down and budget the difference between how much you earn and how much you spend each month – what’s left over for home loan repayments? Don’t compromise your standard of living by getting yourself into too much debt!

One way to cut down the cost of your purchase is to decide exactly which costly features of a home you do and don’t want. Consider how important, or unimportant, features such as the following are to you:

By deciding which costly features of a home aren’t important to you and buying according to those priorities, you’ll avoid the temptation of unnecessary features that will have you paying more. You’ll also save yourself a lot of time, because you’ll be able to narrow down your property search to fewer properties.

In summary, to find out how much you should spend on a house, get your home loan pre-approved. Then, determine which costly features are and aren’t important to you and decide how much you are willing to pay in loan repayments.

Image courtesy of 401k Calculator.

About the Author

Residential Settlements

We provide real estate settlement services throughout Western Australia. In addition, we complete Related Party Transfers, Family Transfers, Private Sales and other title related services.