June 01, 2015
Buying a home is an exciting step – and one that can really build your wealth, but it pays to budget for the purchase costs, which often go well beyond your initial deposit.
Upfront loan fees
Depending on your lender, you could be asked to pay a loan application fee and/or valuation fee. These costs vary widely between lenders, and we can explain which fees your preferred lender charges. Do note, these upfront fees are reflected in the loan’s comparison rate, which makes it easier to compare between different loans and lenders.
LMI applies if you borrow 80% or more of your home’s value. Premiums vary according to the size of your loan, your deposit, the type of property and the lender. This one-off cost can often be added to the balance of your loan, and while this can make the premium more manageable you will pay interest on the cost.
Your home is a major investment and it is definitely worth organising a pre-purchase pest or building report or a strata report if you’re buying an apartment, villa or townhouse. It could save you some unexpected costs further down the track.
Legal/ conveyancing fees
Unless you have significant legal experience you’ll need to engage a solicitor or conveyancer to handle the process of transferring the property from the seller to you, the buyer. Ask friends or family for recommendations but do shop to compare the cost between providers.
Stamp duty is levied by your state or territory government, and you’ll typically need to pay it on settlement of your property. As duty can be a major purchase cost so it’s important to understand what you could be up for and budget accordingly. Discover what you could be up for with our Stamp Duty calculator.
Home Building Insurance
As soon as you have a financial interest in your home – and that includes paying a deposit when you exchange contracts, it makes sense to take out home building insurance. You can always add contents insurance once you have moved in. Shop around between insurers but remember the cheapest policy isn’t always the best.
Council and water rates adjustment
You and the property vendor (seller) share these costs depending on the length of time each of you is the owner of the place during the settlement period. You’ll be asked to pay this adjustment at the time of handover.
Buying a new home offers a good opportunity to compare between energy providers to see who offers the best deal for your needs. You may not have any connection fee at all if you are transferring an existing connection from another property.
The cost of moving furniture into your new home can range from a case of beer for a few enthusiastic mates to several thousand dollars for a professional removal firm. Doing as much of the work yourself can trim the cost.
To plan for your property purchase costs, download our free fact sheet or speak with Mortgage Choice, Stanmore on 9565 4880 for more information.