It’s easy to get wrapped up in the excitement of buying a home, especially if this is your first time. It will likely come as a surprise that the purchase price for a property is just the starting point.
It pays to be aware of all the upfront, hidden and ongoing costs of buying a home so you’re not caught out and risk not being able to make an offer on your dream home.
We recommend doing your research using online calculators and breaking it down into a simple budget. Of course if you’re time poor or unsure what to look for, we are here to help. We can help you uncover the real cost of buying a home.
Here are some additional points to consider:
Deposit
When purchasing a property you’ll typically need to provide a deposit to secure the sale. The deposit is usually a percentage of the property’s purchase price, commonly ranging from 5% to 20% of the total value.
Stamp duty
Stamp duty is a state or territory government tax imposed on property purchases. The amount varies depending on the property’s value, location and whether you are a first time buyer or purchasing an investment property. Each state and territory has its own stamp duty rates and thresholds.
Mortgage registration fee
This fee covers the cost of registering your mortgage on the property title. The fee varies depending on the state or territory and is usually a fixed amount.
Lenders’ mortgage insurance (LMI)
If you have a deposit of typically less than 20% of the property’s purchase price you may be required to pay LMI.
LMI protects the lender in case you default on your mortgage. The cost of LMI depends on the loan amount and the deposit percentage. Some lenders allow you a smaller than 20% deposit without requiring LMI.
It’s important to discuss the range of product options and lenders available with us before finalising your decision.
Conveyancing or solicitor fees
You’ll need a conveyancer or solicitor to handle the legal aspects of the property purchase including title searches, contract preparation and settlement. The fees charged by these professionals can vary, so it’s advisable to obtain quotes beforehand.
Building and pest inspections
It is recommended to have a professional inspection done to assess the property’s condition and identify any issues. The cost of these inspections can vary depending on the size and location of the property.
Valuation fee
Some lenders may require a property valuation to determine its market value. The cost of the valuation is typically paid by the buyer and can vary depending on the property’s value.
Mortgage application fees
Some lenders charge an application fee when you apply for a mortgage. This fee can range from a few hundred to a few thousand dollars.
Property insurance
You’ll need to arrange building insurance to protect your property against damage or loss. The cost of insurance will depend on various factors such as the property type, location and insured amount.
Home insurance covers the structure of your property against damage or loss. Contents insurance protects your personal belongings within the property. Building and contents insurance premiums will depend on factors such as the property’s value, location and the level of coverage you choose.
Moving costs
Once you’ve purchased the property you’ll need to consider the costs associated with moving, such as hiring a removalist, transportation and any temporary storage fees.
Utility connection fees
Most power and utilities remain connected these days, however it’s a good idea to confirm these details at settlement to ensure you do not have to pay reconnection fees.
Upfront costs are between 7% and 11% of the purchase price. On a $400,000 home, that’s $30,000+ on top of the deposit.
It’s important to note that the above costs are general in nature and can vary based on individual circumstances and the state or territory in which the property is located.
It’s advisable to consult with professionals such as conveyancers, solicitors and us as your mortgage broker to obtain accurate information about the costs involved in your specific situation.