FINE & COUNTRY PREPARE FOR THE UNEXPECTED
Being prepared for the unexpected is part of owning property. Jonathan Handford from Fine & Country Leamington Spa discusses things to be aware of about owning a property.
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While it’s not always possible to determine when it will happen, something will need repair on a home at some point. It’s a certainty homeowners can’t ignore. Putting money into a contingency fund each month to provide a financial cushion is a wise move – and it may be a saviour when a house-related crisis strikes.
On average, homeowners in the UK stay in their properties for just under 21 years before moving – sometimes longer. It is fair to say that a lot can happen over two decades. Having a plan of action in place for unanticipated costs can help homeowners tackle whatever life throws at them. The goal is to have the means to address changes or emergencies that occur, without jeopardising home ownership or placing the homeowner under financial pressure.
There are a number of emergencies that can occur to the house itself, such as roof repairs or rising damp, both of which can be a substantial expense. Then there are the financial emergencies that affect the homeowner, such as redundancies. The pandemic certainly showed many homeowners how precarious their situation could become. The question every homeowner should ask is: if something like this happens, will I still be in a position to afford the home? For the majority, the answer is probably no, which is why a contingency fund is imperative. While the idea of putting money aside can be daunting, especially with the constantly rising cost of living, the consequences of not having a financial cushion can be far greater.
In essence, there are three basic steps homeowners need to take to start creating an emergency fund. This provides a safety net that will assist with any obstacles, regardless of whether it is something as big as losing a job or as trivial as a leaking toilet.
One – Determine the required amount As a minimum, homeowners should aim to set aside approximately one month’s salary, however, naturally the more the better. A six-month financial cushion should see homeowners through most crises that arise. Saving half a year’s worth of income is no mean feat, though – it will take a fair amount of time and planning to achieve. Setting smaller goals along the way helps to maintain focus and stay motivated.
Two – Choose a saving vehicle When building up a significant amount of savings, selecting the right savings account is crucial for success. Interest rate yields vary from one account to the next, so it might require some research to find the product that will yield the greatest return. Often the savings accounts with the highest interest rates will require the account holder to lock their money away for a fixed period. This is not always ideal. The interest rate, as well as accessibility, are the key factors to consider.
Three – Automate the savings Setting up a monthly direct debit makes
the process far easier and helps establish and stabilise a savings pattern. If a predetermined amount of money is transferred into a savings account automatically each month, it takes decision-making out of the equation and ensures a contribution is made towards the contingency fund regularly with limited effort on the homeowner’s part.
For advice on selling or buying property, please contact Fine & Country Leamington Spa on 01926 455950 or visit
www.fineandcountry.com/uk/leamington-spa
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THE MIDLANDS PROPERT Y GUIDE F INE & COUNTRY
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