Buying a home is a sizeable financial goal, and many people spend a significant amount of time striving to gather the funds for the deposit, only to find they are still short of the dollars required to secure the purchase. The hidden costs associated with buying a home can be significant, but they needn’t be a surprise providing buyers are aware and prepare for all of the fees and charges associated with a property sale.
Read on to learn about what to prepare for to ensure you have the funds ready to go to cover the range of fees and charges associated with your real estate transaction.
Stamp Duty
Those new to the property market might be shocked to learn the rate charged for stamp duty. Essentially a tax placed on property transactions, stamp duty is paid to the state revenue office. A quick google search will lead you to several online stamp duty calculators that can provide an indication of the amount of stamp duty you will pay for your property. The amount of stamp duty you pay varies due to a variety of factors including if you are a first home buyer, an owner-occupier and if the property is existing or newly constructed.
Conveyancing and legal fees
The official process of purchasing a property requires a considerable amount of legal work and documentation. While it is not mandatory to engage a professional to complete your conveyancing, it is certainly advisable to ensure settlement goes smoothly. Your conveyancer can review the contract of sale for you to to ensure everything is in order, but expect their services to set you back around $1,800.
Mortgage registration and transfer fees
When the special day arrives for you to register your mortgage and transfer officially ownership into your name, you will find that it is also time for another bill! Expect to put aside around $150 for the registration fee and possibly quite a bit more for the transfer fees, which can be into the thousands.
Loan establishment fees
The fees associated with establishing your loan will vary depending on the lender you choose for your mortgage. It is worth investigating the application, valuation or other fees prior to finalising your lender, as these all add to the total cost of your loan. It may also be worth trying your luck and asking if your lender can waive the fees altogether!
Lenders Mortgage Insurance (LMI)
As a general rule of thumb, if you are borrowing more than 80% of the value of the property you will be required to pay lenders mortgage insurance. This expense exists to protect your lender in the event that you default on your mortgage. The amount of insurance that you pay varies depending on the financial institution and increases on a sliding scale – the smaller your deposit, the higher your LMI.
Building and Pest Inspections
The need for a building and pest inspection will range from “nice to have” to “absolutely essential” depending on the age, condition, location and materials used in the property you are considering purchasing. It is a moderate investment (expect to pay around $600-$800) but could save you from making the momentous error of buying a home with a pest infestation or structural issues.
As with many aspects of a property purchase, it is imperative that buyers do their research and shop around to ensure they get the best deal. Adequate preparation, information and savings goals will ensure the process of securing a dream home can be a reality.
