What are the costs of purchasing property? (Part 2)

November 19, 2014
David Wilson

In the second part of our blog on the costs of purchasing property, we're going to cover actual purchase and construction costs

Purchase costs

Conveyancing /solicitor fees
When purchasing property, the usual practice is to engage the services of a solicitor or conveyancer to carry out the legal work involved in the purchase. Expect to pay between $800 - $1,200 depending on the complexity of the purchase and how much work is required.

Pest / building inspections
It is always a good idea to have any property you are considering buying inspected for insect infestations such as termites and that it is structurally sound and complies with building regulations. The cost of these inspections is payable by the property buyer and usually range from $500 - $1,000 depending on the size, condition and location of the property.

As a condition of the loan settlement, lenders will impose a condition that all security properties are covered under a building insurance policy. The amount insured should be the full insurable value of the dwelling and will protect the borrower (and lender's interests) in the event the building is damaged by fire or some other catastrophe.

Construction costs

Construction loans
These loans normally require more work by the lender due to the way they are progressively funded during the construction period. Some lenders will simply add an additional construction loan fee, while others will charge a progress payment fee each time the builder asks for a payment. 

Also there may be an additional inspection fee for a valuer to inspect the property to ensure the building is in the state the builder is claiming. A normal construction would have four or five progress payments and two inspections.

Site costs and service connection costs
Many people assume that site costs and connection of services are included in their building contract, but this is not always the case. Unexpected events such a hitting rock or needing to build retaining walls can add thousands to the site costs.

When it comes to connecting services such as power, water and phones, service providers usually only allow for 5-10 metres from street to house. You may need to pay extra for longer distances than this, especially if you are building on a large rural block. 

If you would like further information on the costs associated with purchasing a property please call us on 03 9432 6070 or click on the 'contact us' tab at the top of this page.

Posted in: Home loans

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