Buying a home is probably the biggest investment that you will make in your lifetime. While the cost of the property is without a doubt the biggest portion of the cost, there are a few other costs for which you must budget.
Knowing what to expect when it comes to costs, will ensure that you aren’t faced with any nasty surprises before you finally settle the sale.
Here are some of the costs that you can expect when buying your new home.
The deposit
The deposit represents your contribution to the price of your home. The bigger the deposit, the less you will have to borrow. This, in turn, will reduce the size of the repayments and the overall interest paid over the term of your loan.
If you haven’t saved enough for the deposit, you may have to take out Lender’s Mortgage Insurance, adding to the cost of repayments.
The property prices
Once the sales contract has been signed, the buyer must pay the deposit. This is usually 10% of the purchase price. The buyer must pay for the property on the day of settlement unless the deed of purchase says otherwise. So, by this time you must have organized all your funding.
Loan costs
Application Fee
The application fee costs between $500 and $1000. It is used to cover bank costs and settlement attendance fees. It is a one-off cost.
Valuation fee
The lender will want to ensure that the property will cover the loan in case of payment default. They will, therefore, require a property valuation certificate. This will cost between $200 and $300.
Annual fee
Some loan providers will charge an annual fee for home loans. These costs typically run from $250 to $450 depending on who you borrow from.
Monthly service fee
This will cost between $5 and $15 per month. It covers the costs of administering the loan and may also cover the prepayment on a loan with a fixed interest rate.
Stamp duties
This is a tax levied by the state and territory. The size of the tax depends on many factors including the location of the property, and applicable exemptions and concessions. If you’re a first-time homeowner, you may qualify for an exemption. To find out how much you will have to pay, contact the relevant authority in the State or Territory where you plan to buy.
Inspection costs
Building inspection
Building inspectors are professionals who are trained to look for hidden defects and maintenance issues in a home. They inspect the property and then compile a detailed report.
It is essential that you understand the condition of the property before you buy so it is advisable to budget for this expense.
Pest inspection
A pest inspection looks to uncover any damaging pests. The inspection report will cover both the presence of pests and the recommended treatment.
The building and pest inspections will cost about $350 for both.
Conveyancer fees
While you don’t have to use a lawyer or conveyancer, buying property is a complex legal process and experts trained in these transactions can help to make the process happen quickly and with fewer problems.
The legal costs will depend on how the complexity of the sale
Insurance
Property and contents
Most homeowners will ensure their home and contents together. Property insurance is required to cover the costs of rebuilding in case of serious damage to your home caused by flooding, fire etc. Get more than one quote as the insurance market is competitive and prices can vary substantially.
Lender’s mortgage insurance
Unless your deposit is 20% or more you may be required to take a lender’s mortgage insurance. The price of this insurance will depend on the lender and the size of the mortgage.
Other costs
It is also important to make allowances for other costs like
Curtains and furniture
Transport costs for moving
Counsel fees
Strata fees
