June 15, 2015
How much does it cost to purchase a property?
Buying a home is an exciting and stressful time whether it is your first home or a new purchase. Many buyers aren’t aware of all the costs associated with purchasing or become confused with the many expenses that can occur.
Potential extra costs to consider when purchasing:
Stamp duty – Stamp Duty is a state government tax that covers a range of transactional costs and is payable regardless of whether you’re buying your first or a subsequent property. Your Mortgage Broker will be able to determine if you qualify for an exemption or not.
Title registration fee – Again, this one is another state government tax to register the transfer of title of the property from one person to another and the fees for registering a mortgage. The buyer always meets these costs.
Lenders’ mortgage insurance – If you are borrowing more than 80% of the total purchase price, you may have to pay lenders’ mortgage insurance, or LMI. This insures the lender against any loss incurred if the borrower defaults and the proceeds of an enforced sale of the security property are insufficient to clear the debt. Some lenders may enable you to capitalise this into your loan, depending on your loan size and deposit amount.
Loan application fees – Also known as a loan establishment fee, this is payable when you take out a home loan.
Settlement Agent fee – This refers to the fee charged by the Settlement Agent that purchasers 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 the buyer’s expense. Most lenders require them as a condition of loan approval.
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 – Removalists can be costly but it is worth shopping around and perhaps if necessary paying extra to enlist a reputable firm.
New furnishings –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. With the exception of items such as fridges etc, we always recommend moving in and “feeling the space” before buying too much large furniture. There is nothing worse than moving in and then realising that the great dining suite you just bought doesn’t fit!
Importantly, we are here to help so don’t hesitate to call Mark or Herman on (08) 92871030 for assistance with the finance for your next purchase.