So, you have finally saved up a deposit to buy a home and you want to know what other costs are lurking out there that you don’t know about?
The largest and most obvious cost that comes to mind is the purchase price of the home. However, there are several additional costs which can often escape your attention when budgeting for your new home.
There are a range of costs in relation to loan application fees, legal costs, registration fees, searches and inspections and stamp duty. That’s all before you even think about moving house.
If you are borrowing money for your purchase, you may be faced with several fees from your financial provider. These financial costs will often include a loan establishment fee which can range up to $800 or more depending on the lender and the particular loan agreement. These fees are often wrapped up in the loan itself, so they may not always be apparent to you as an additional fee.
If you are borrowing over 80% of the value of the property, you will also be required to take out mortgage insurance. Mortgage insurance protects the lender in the event that you default on the loan and the costs vary depending on the amount loaned; however, the cost can often be several thousand dollars. Mortgage insurance can often be added to the loan amount rather than being paid upfront however there are implications with this, such as a higher loan and therefore increased repayments. Your financial provider will also require a valuation of the property, which you will need to fund. Valuation fees vary dependant on location and the company used but are often around $200.
Legal or conveyancing fees are another expense which you will incur in buying a property. At Ozpropertylaw we offer an all-inclusive fixed fee. This means that what you are quoted will include all professional fees for the conveyance and the basic searches required to complete the conveyance, such as a title search, rates and a water certificate. By obtaining a free quote on our website, you will be provided with our fixed fee for your purchase and a list of the included searches. The included searches vary dependent upon location due to different requirements in different states.
If you are in the enviable position of not having to borrow money to fund your purchase, you will need to pay the government fee for registration of the title in your name. In most states this ranges from $200 to $450. It is not included in our fixed conveyancing fees. If you are borrowing money you don’t need to worry about this fee, as your mortgagee will pay the fee and wrap it into their loan.
As outlined in our blog on pre-purchase inspection reports, it is important and wise to obtain pre-purchase property and pest inspections. The cost of such reports can range from $250-$1,200 dependant on the company used and your specific needs. In some states, such as the ACT, the property and pest report is included in the Contract for Sale but the buyer must reimburse the seller for the cost of the report on settlement.
Stamp duty is another large additional cost in purchasing a home and can easily be in the range of $20,000 or more. While there are first home buyer’s exemptions in most states and territories these schemes are often being updated and changed and may not result in a full exemption. Whether you qualify for an exemption depends upon the purchase price and your personal circumstances, such as your income.
You may also face additional living costs if you are unable to sell your current home before you purchase another, or you are unable to terminate your current lease at the time of settlement of your purchase.
Unless you are an investor buying property, there will be expenses associated with moving. These expenses include the costs of removalists, fees to connect electricity and gas and mail redirection.
All in all, there are a lot of different fees and costs involved in purchasing property. If we can assist you with keeping your conveyancing costs down, please call us on 1300 136 386.