Owning a home isn’t just paying back a mortgage over 30 years – it also comes with dozens of extra expenses you may not have thought of yet.

Congratulations! Through some combination of hard work, self-denial, and outside assistance, you’ve managed to scrape together the savings to buy your first home. Getting a deposit together is one of the modern world’s great feats of financial engineering, but the journey isn’t over yet.

Now that you’ve entered the hallowed enclave of potential property-purchasers, a host of new challenges await. The first and most important of these is figuring out the price range you can afford. That seems like it should be as simple as working out what mortgage repayments you can pay at current interest rates while still being able to buy power and food, right? Wrong!

Think of a house as a Russian nesting doll of expense, where a mortgage gives way to dozens of other new and invigorating costs over and above what you paid while renting, until finally, you get to the last doll, which represents bread for your family. These are some of the potential extra bills you should consider before determining what size mortgage you can take on.

RATES

It may seem obvious, but rates are the single biggest ongoing bill for most homeowners. That’s why every mayoral candidate can win over a crowd of incensed voters just by saying the words “council waste”; why every councillor and local board member has to stand to be harangued over them in meeting halls by people with crossed arms roughly 48 times a year. Despite that, prospective buyers don’t always factor them into their budgets when they’re swooning over their potential dream homes.

They should. Rates in Auckland averaged $2500 last year. Incumbent mayor Phil Goff has promised they’ll continue to rise by 3.5% a year if he wins re-election in October. In Wellington, annual rates average more than $3000. But those are just averages. If you’re buying in a suburb where house prices are rising faster than average – say Mt Albert in Auckland – your potential bills could increase more than someone in a place where property price rises are slowing or growing at a below average pace.

Whatever happens, keep that extra cost in mind before you take out a $600,000 mortgage and end up trying to figure out whether it’s possible to survive off 2-minute noodles for the next 30 years.

REPAIRS

A doer-upper villa in Mt Roskill may seem like an attractive option. Its price tag is a little lower than a newer home. Maybe you could get an extra bedroom and a backyard for the same as you’d pay for a house a few decades younger. You’ll look at the decaying walls, the rotting carpet, the brown-stained toilet bowls, and imagine the beauty you could mould out of the mess. In that romantic moment of projection, you may be inclined to gloss over all the possible problems and expenses and instead internalise that word from the real estate ad – “potential”.

Unfortunately “potential” is nearly always code for “potentially very expensive to make liveable”. The first thing to look out for in homes with “potential” is stuff that’ll necessitate urgent repairs. Settled.govt.nz has a list of problem building materials to check on when you’re inspecting a property, including black “Dux Quest” piping from the 70s or 80s, asbestos, and weatherside cladding which has the tendency to turn to mulch in a light shower. That’s why it always pays to get a building inspection to make sure multi-thousand dollar repairs don’t turn your potential bargain property purchase into an expensive overreach.

RENOVATIONS

Maybe your house isn’t literally falling apart, but it’s still a bit rundown. Don’t underestimate the cost of doing it up. Planning on painting the lounge and kitchen? That could add $10,000 if you hire someone to do it for you. A slowly rotting deck that needs replacing? That could cost anywhere from $10,000 to $25,000. The kitchen needs to be redone? May God have mercy on your soul.

None of these things are deal-breakers. They’re often aesthetic improvements, but they should be budgeted in before you buy a place. Something like insulation is more urgent. Thanks to the sadomasochistic tendencies of nearly every New Zealand builder in the 20th century, many houses don’t have insulation, and many don’t even have wall or ceiling space to install it. You may be alright to freeze for a while, but if you’re planning on doing something expensive like having children, and you don’t want them to end up shivering through winter like an orphan in a Dickens novel, you may need to insulate. That could require putting in a second ceiling – the cost of which could bankrupt a small country. Always check the insulation, and potential for insulation to be installed, before buying a place. I’m speaking from experience in this case. Please clap.

INSURANCE

House insurance is a kind of necessary evil. Most years your house won’t burn down. But the year it does, you’ll feel happy you paid up.

Most commonly, people insure their houses for the full cost of a rebuild. You can figure out a rough estimate of that amount on the websites of most insurance companies and banks. It’s worth finding out all you can about your property though. If it’s being sold by a licensed real estate agent, they should be able to provide you with all the information about your home you need for a detailed quote – what year it was built, the materials it’s made of, and what condition it’s in now. Most importantly, make sure you check whether there’s been any past incidents at the house that mean it’s now hard or impossible to insure. Not finding that out in advance could mean a huge cost down the line. Settled.govt.nz has a full list of what to look out for with insurance.

BODY CORP FEES

Some of you will look at this list of potential bills and think “I should definitely buy an apartment instead”. In many ways that’s an understandable position. Alice Neville has delved deep into the reasons why it’s potentially wise, and settled.govt.nz has more advice on what to think about before you join a commune.

Apartments are usually cheaper than freestanding houses. Increased density means better access to public transport and amenities. You won’t be contributing quite as much to society’s ongoing project of making our world a boiling hellscape.

But apartments do come with some unique and ongoing costs. Every apartment comes with the additional burden of body corp fees, which help cover the upkeep of the building and its facilities, the cost of power in common areas, insurance, water, and the building manager’s fees. These can be surprisingly difficult to absorb. A 50m² one-bedroom apartment will likely set you back between $3500 to $4500 a year. A 65m² apartment could incur fees of $4000 to $5000 a year. If you have a carpark, it will likely cost you about $1000 a year. Keep these fees in mind before you swear off gardening, sneer at the sad suburbanites, and enter the ranks of the apartment people.

But don’t despair. It can be done, and the more aware you are of the total cost of purchasing your first home, the less likely you are to encounter any financial booby traps. Follow my tips and the valuable guide at settled.govt.nz to organising your finances and begin the engineering of that great financial structure – the deposit.

Happy house hunting everyone.

This content was created in paid partnership with settled.govt.nz. Learn more about our partnerships here.