It's not just a house

When buying a house, it is standard to consult the help of a local real estate agent and a home loan specialist because you want expert help with one of the biggest financial decisions in your life.

Why then wouldn't you also enlist the services of a financial adviser?

Although buying a house is regarded as an isolated, potentially one-off financial event (and a big one at that), it has much wider financial ramifications.

That is, it impacts on cash flow and cash surpluses, insurance arrangements and estate planning – almost all of the necessary components of making a financial plan.

The starting point before buying a house is a very detailed budget. This will make affordability considerations much more certain, and it will also highlight what resources you have to cover the hefty and sometimes hidden costs associated with buying a house.

Given you are about to buy a significant asset, you also need to think about insurance – mortgage insurance, home and contents insurance and personal insurance. How will you cope financially if your circumstances change?

And what will happen to the asset when you die? Partners must decide whether the asset will be held as joint tenants or as tenants in common. If it is the latter, a current will is essential.

It’s important to realise that financial advisers assist with the big picture decisions as well as helpful tips.

For example, diversifying your mortgage and spreading risk across both a fixed and variable loan. Further, make sure your loan is set up with an offset account and a redraw facility.

Finally, opening one of the government’s first home savers accounts will help you reach your savings goal faster while being taxed at a lower rate.

Speak to your financial adviser to gain a broader understating of how buying your dream home fits into your financial strategy.

photo credit: Tor Lindstrand via photopin cc