The Forgotten Cost of Buying a House
Weather you are buying your first house or the fifth house, you will be hit with a host of upfront costs that most people do not account for. Here are 10 costs you need to factor in (apart from your deposit).
Stamp duty can add roughly 5% to the purchase price.
First homebuyers qualify for exemptions – though these vary by state and territory.
You’ll need to budget for mortgage application fees.
Get good legal and conveyance people, cheaper isn’t always best.
Try to save your 20% deposit (and avoid Lenders Mortgage Insurance).
Inspection fees add up – but it’s a mistake to skimp on them.
These upfront costs can get you down. A good financial advisor can help heaps.
Outside the deposit, this’ll be your biggest upfront cost. Stamp duty varies greatly from state to territory to state—and the rules (and exemptions) can seem complicated.
Check out the government websites for your state or territory. But be warned: the various schemes change almost yearly so you’ll need to check and double check.
As of July 2017, if you’re a first homebuyer buying a home under $600,000 home, your stamp duty will be exempted. But many first homebuyers qualify for grants and exemptions.
This is a fee levied by the state governments to cover the cost of transferring the title. Again, there’s a huge disparity between states and territories. In Victoria, for instance, the transfer fee is just $1,498 (on a $600,000 home). In South Australia, it’s $4,701.
Mortgage registration fees
Another one of those state/territory fees, though thankfully it's not a biggie. On that $600,000 house, the cost ranges between $114 in (Victoria) and $138 (New South Wales).
These fees are for a licensed conveyancer to review your contract, perform checks on the title, and draft the settlement documents. They basically do the paperwork. Depending on complexity, it’ll cost between $700-$2500.
Mortgage application fees
These are the fees your bank charges to set up your mortgage. Most banks charge additional fees (mortgage registration, loan service fee etc.) so ask them to itemise everything. And also ask if they offer reduced-fee deals or packages.
Lenders mortgage insurance
If you get a 20% deposit together, you usually won’t need Lenders Mortgage Insurance. But homebuyers with a smaller deposit will. This is a one-off fee equivalent to between 1-3% of your loan amount.
Building inspection fees
A thorough building inspection is essential. You might be tempted to skip a pest inspection, but the average termite colony can cost upwards of $7,000 to remove.
Home, building and contents insurance
If you have a mortgage, building insurance is compulsory. Premiums vary sharply by state/territory, but budget around $1000 a year for home insurance (on a $600,000 house), and an average of $500 for contents. But spending an hour shopping online and comparing the varies insurance companies can save you thousands in the long run.
These can vary massively depending on how much stuff you have, and how far you’re moving. But A Guide to the Cost of Home Purchase estimates between $550-$3500.
Connecting Gas, Electricity, Phone and most importantly Internet
Spend a bit of time shopping around for your utility provider as these are cost that will continue to come out month in month out. Make sure you lock in a provider before you move in and activate it a day before settlement day so you are not left in the dark when moving in.
Get specialist help
Approaching a home purchase alone can be quite daunting, give us a call on 0433 590 621 and we can be there every step of the way.
"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"