As a homeowner, you no doubt understand that even in the best of times, there are little annoyances and projects you want to get to in an effort to keep your house in great shape. But what happens if it's not the best of times, and something occurs that requires immediate repairs? Will you be financially capable of handling it?
For many people, the answer is no. Upskilled noted that the majority of Australians don't have much of an emergency fund of any kind, and that it's absolutely vital to build that kind of safety net whenever you can. Whether it's for emergency home or auto repairs, to cover emergency expenses you didn't or couldn't expect or to keep you afloat in the event of financial hardship like job loss.
However, as you might expect, this kind of fund is even more critical for homeowners, because leaving your property in rough shape while you try to scrape together the money needed to cover repair costs could end up doing even more damage.
When it comes to building a solid home-repair emergency fund for yourself, it's important to know both why it's going to be so vital to ensuring your house stays in the best possible shape and how much you should set aside.
For one thing, as noted above, there's always something you should be doing to do basic upkeep on your home, and that often costs money. The Balance pointed out that this could include replacing the gutters, roof, windows, siding, flooring and more, or it could be related to maintaining vital systems like plumbing or HVAC.
As a general rule, experts would recommend that you put aside about 1% of your home's purchase price each year to cover any or all of these repairs. For instance, if you paid $500,000 for your property, you'll be wise to put $5,000 aside each year (or about $400 per month). There may be many years when you don't need to tap these funds at all, or others where you need to withdraw potentially thousands of dollars from your fund, but any efforts you can take to build up at least a bit of a financial cushion for a potential issue, the better off you — and your home — will be.
Of course, the reason many people don't have a sufficient emergency fund of any kind is that it's hard to put together a few hundred dollars to spare. If that describes you, there are still options you might be able to tap for emergency repairs, according to Smart Mortgage. These include home equity loans or lines of credit, but these are potentially sizable financial arrangements that should not be entered into lightly. Ideally, you will have at least some money saved to cover costs large and small, and then would only have to fall back to long-term options in absolute worst-case scenarios.
If you are making any repairs or other renovations with the idea that you will sell your house in the relatively near future, it will also be highly important to find a trustworthy, experienced real estate professional that will work with you at every step of the sales process. At Ray White Surfers Paradise, we have closed countless sales for our clients on both the buying and selling side, so we can seamlessly guide you through everything you'll encounter. Get in touch with us today to learn more about how we can help you.