The years of saving and keeping an eye on the housing market have paid off: you're ready to buy your dream house! You might be excited to find that you can afford payments on a luxury home (a home in the highest ten percent of your local market prices). However, before you talk to your real estate agent, you should definitely take into consideration some of the unseen costs of luxury homes to make sure you know what you're getting yourself into. Talk with your financial advisor about the following costs so that you can have a beautiful, luxurious home without unpleasant surprises later.
Taxes and Insurance
If you already own a home, you should already be paying homeowners insurance and property taxes. However, when you buy a luxury home, you need to be prepared for those costs to increase. An insurance policy on a high-end house is going to cost more since it would cost more to repair. If you have a luxury home, you likely have many valuable items that you would also want insured, which drives up the cost of the policy. Even once the mortgage is paid off, property taxes and insurance are costs that will continue, so make sure that you're prepared to pay.
You will want to consider how much you pay now for water, gas, and electricity. You should be able to do some calculations and get a rough estimate of how much those costs could increase once there are many more rooms to heat, cool, or light up. These are also costs that don't go away after mortgages are paid.
A luxurious home is sure to attract attention, sometimes from the wrong sort of people. You will want to install a reliable security system to keep yourself and your property protected. These come at a variety of prices, depending on the specific features you require to feel safe. You may want something more simple such as an alarm system, or a more high-tech system of video cameras around the property or even drones to descend upon visitors as they walk up to the house. Either way, security is an important cost to consider.
If you're going to buy a luxury house, you'll want it to actually feel luxurious. Ultimate comfort is easier to achieve with smart-home technology. You'll be able to lock doors, adjust the thermostat, close blinds, turn on lights, play music over your speakers, look in your fridge, and more, all from your smartphone. Smart-home technology is a huge reason people want a luxury home in the first place, so you'll want to take that cost into account.
Landscaping, Cleaning Services, and Pool Maintenance
Most people that purchase a luxury home are also looking to purchase privacy, and privacy often comes with a large property. You are responsible for the upkeep of all that land. Since you won't have time to actually live in luxury if you have to spend all that time cleaning your huge house, buying chemicals for the pool, or trimming hundreds of tree, you will definitely need to set aside room in your budget to hire other people to do those tasks.
Once you look at all the costs of owning a luxury home beyond just the mortgage payments, you'll have a more realistic idea of what you can afford. Talk to a real estate agent for more information about luxury real estate in your area.