Buying a home is easily one of the most significant purchases. But the reality is that simply saving for a down deposit is not enough. The challenge is having enough to cover all costs involved from borrowing costs to legal fees and more.
The deposit is just one cost of buying a home. A good rule to follow is to allow for an additional 5% of the property’s purchase price for extra buying costs. The following is a closer look at additional costs you can expect to pay.
Building inspections identify any defects or pest issues with the property. Relying on a visual inspection is simply not sufficient. Even if you choose to build a new home, getting inspections done at various stages is strongly advised.
The cost varies depending on the type of property but is typically several hundred dollars. Specialists are able to immediately identify issues even in new properties.
Your lender may charge a number of additional fees. These include:
- Application fee: This is a one-off charge which can be waived in some cases. Expect to pay upwards of $700 for this fee.
- Property valuation: Banks typically arrange an independent valuer to assess the property. The fee can cost as much as $300.
- Lenders Mortgage Insurance (LMI): Lenders charge additional fees if you are unable to put down at least a 20% deposit. The cost varies depending on the property’s purchase price.
These costs can quickly add up but some lenders may be willing to waive the fee or include it as part of the loan. Be sure to speak with your lender for additional details.
Stamp duty is a general tax required for certain documents including title transfers. The amount is calculated based off the value of the property and varies for each state. This is one of the largest costs for buying a property.
Other charges include other charges including a property transfer fee and mortgage registration fee. The amount you can expect to pay depends for each state.
Situations can happen that are completely out of your control. Being prepared for the worst is your next best option. Insurance is a necessary expense to protect your investment. Some products to consider include:
- Home insurance: This type of insurance can be beneficial for protecting you financially in the event of a natural disaster or loss through burglary.
- Mortgage protection insurance: This type of insurance is specifically designed to protect a repayment mortgage if the borrower is unable to whether due to illness or even illness.
- Income protection insurance: Pays up to 75% of your income if you are unable to work whether due to injury or illness. The premiums are typically tax deductible but tax is payable on the payments.
Not all these policies are necessary but is certainly worth considering. The cost depends on a number of factors but the insurance providers will be able to provide an accurate quote for you.
Conveyancing is the legal transfer of property from one individual to another. The process requires an experienced conveyancer to lodge the necessary paperwork and finalise the transfer. The fees vary but typically cost around 2% of the property’s purchase price.
When you are finally ready to move, additional costs you can expect include removal services, utility connections, and other fees to ensure you are getting the right services. You can minimise some of the moving costs if you do the majority of the moving yourself.
Maintenance and Repairs
The property you will be buying may need some additional work. The cost depends a great deal on what kind of work needs to be done and can easily cost several thousand dollars. Be sure to budget accordingly if you plan to do any upgrades or repairs.
Loan Monster understands that buying a home can be an overwhelming process. Our consultants work closely with you at every step to provide guidance and answer all your questions. Contact us today to get started with the home buying process.
The information contained in this website should not be taken as constituting personal advice. We recommend that you seek professional assistance before acting upon any information provided or linked on this web site.