Making Sure You Don’t Overspend When Buying an Apartment

If 22% of home buyers spent more than they budgeted for when purchasing property, then how do you avoid it?

When ME, a subsidiary of the National Australia Bank (NAB), surveyed 1,000 home buyers, they found some out some interesting things. Of those who went over budget, 46% exceeded it by $30,000 or more. And nearly 30% exceeded it by $50,000 or more. But why would they do this?

The survey respondents said they over-spent because they:

  • fell in love with the property (52%)
  • underestimated the budget required (28%)
  • were impatient (20%)
  • agent underquoted (15%), and
  • were swept up in a bidding war (12%)

Even then, 64% of respondents said they had suffered negative consequences, such as having less disposable income than planned and emotional stress.

So, how do you prevent this when buying your new apartment or home?

Well, it’s always good to start with the cold, hard, cash. When you go to calculate what you can borrow, make sure you provide the bank with accurate information. Whilst your bank is legally obligated to only lend you an amount that you can afford to repay over the repayment period, the more accurate the information you provide them with, the more accurate long-term assessment they can make.

Then it’s good to make sure that if you’re going to an auction, you’ve got someone with you who will question you. Someone who will keep asking “Are you sure that this is the one?”. It’s the responsibility of the buyers to remain within their set spending limit, particularly if that limit is based on the maximum amount that can be borrowed from the bank, but it doesn’t hurt to bring some extra self-control with you. Avoiding auctions all together is another option.

Another way to stay within your budget is to shop around. If you’re thinking of buying a house, try looking at apartments as well. If you want a three bedroom apartment with a massive backyard, try looking at ground floor apartments or at a house. Limiting yourself is a sure-fire way to ensure that you have fewer options, and therefore may just have to spend more.

If you’re thinking of beginning your search for apartments, check out the PropertyMash website.

Written: 2 May 2018, Updated: 20 May 2020

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