The first thing we think about when we’re saving to buy a home is the deposit. But there are some extra costs to keep in mind when you’re buying a property. Check out our list so you know what you’re saving for.
1. Legal costs
There are a range of legal costs involved when buying a home. These include hiring a conveyancer or solicitor (which can be approximately $1000) to transfer ownership of the property, as well as a property and title search to ensure the vendor is legally entitled to sell.
While fees for building and pest inspections can range from $300-$1000, it can be money well spent if it saves you thousands in potential repairs. Inspections also provide you with piece of mind that there are no hidden problems with the property.
3. Valuation fees
Your bank or finance provider may charge you to arrange an independent valuer to assess the value of the property you’re wanting to buy. This cost is normally around the $400 mark, and provides a level of comfort to your financier that the money they are lending is protected.
4. Stamp duty
Stamp duty can be quite a hefty chunk of your purchasing budget, and it’s a Government fee that you can’t avoid. The cost will depend on the value of the property and whether you are buying an established home or building. Use your lender’s online calculator to help determine how much stamp duty you will pay.
5. Fees and charges
Be aware of mortgage set-up costs that may be charged by your bank or finance provider. The costs will vary depending on your lender and may include an application or loan establishment fee and documentation fees. You can check out HomeStart’s fees and charges online
6. Lender’s Mortgage Insurance (or alternative)
Most lenders require LMI for home loans of more than 80% of the property’s value, as it protects the lender if you can’t repay the loan. Remember that it does not exist to protect the borrower, and look out for lenders, such as HomeStart, who offer alternatives to LMI
that could save you thousands.
7. Home insurance
After you’ve signed your contract, you will be legally responsible for the property – even before the title passes to you upon settlement. Most lenders will also require your property to be covered by home (building) insurance before approving your loan. Insurance costs vary depending on the style, location and value of your home. It’s also important to set aside some money to protect your possessions with contents insurance once you move in.
8. And when you move in…
Budget for utility costs, renovations and further purchases. As a homeowner you will pay council and water rates, possibly strata fees, plus there are the moving costs to factor in. If you’re a first-time buyer, you may need to factor in the cost of purchasing whitegoods and furniture for your home.