When buying a home, it can and will cost you more than what is listed on the property price tag.
There are many hidden and sometimes unexpected costs associated with buying property. These costs can include: pest and building inspections; legal fees, loan establishment fees, stamp duty and lenders mortgage insurance to name but a few.
To help you understand the true cost of buying a home, we have identified the different expenses you may face during the process.
Stamp duty – One of the biggest costs outside of a property's purchase price is stamp duty. It's a state government tax that covers a range of transactional costs. The cost of stamp duty will vary depending on the price of your property and where you buy. Some states offer certain first home buyer stamp duty exemptions or concessions. To see how much you may be required to pay in stamp duty, use our stamp duty calculator.
Title registration fee – When you buy a property, you have to register the title with your state government. As part of this process, you will be charged a title registration fee, which is approximately $75.
LMI – If you are borrowing more than 80% of the total purchase price, you may have to pay Lenders Mortgage Insurance, or LMI. This insures your lender (not you) in the event you default on your loan. The cost of Lenders Mortgage Insurance will vary based on the size of your loan, what your loan to value ratio is and your chosen lender. It's important not to confuse LMI with building insurance or mortgage protection.
Application fees – Also known as a loan establishment fee, this is payable when you take out a home loan.
Conveyancer or solicitor fee – This refers to the fee charged by the conveyancer or solicitor that you engage to conduct the legal work involved in buying real estate.
Pest and building inspections – These inspections are conducted by qualified inspectors before exchanging contracts, at your expense. Some real estate agents will have preferred suppliers that you may be able to work with at a discounted rate.
Building insurance policy – As a condition of loan settlement, lenders will impose a condition that all security properties are covered under a building insurance policy. The amount of the policy coverage required is the full insurable value of the property.
Removal costs – While this might seem like a small concern when looking at the big picture, every little penny spent counts. Why not ask your family and friends to help with your move – Shouting a meal in thanks would likely be much lighter on your hip pocket.
New furnishings – You wouldn't want to have a great new home, but no money to furnish it! Be sure to include extra cash in your budget for the essentials and also consider factoring in some money for other items, such as new furniture, white goods etc.
For more information on the various costs associated with buying a home, speak to your mortgage broker today.