Buying your first home can be incredibly exciting, but one of the biggest mistakes that first buyers make is failing to budget correctly. This can turn an exciting experience into a bit of a nightmare. When you buy a property, you don’t only have to find funds for a deposit; there are a number of other expenses that must be considered. Below, we reveal the various costs you will need to budget for so you can make sure you are not left short.
Before we delve into the various hidden costs that are associated with buying a new home in Australia, it is important to note that this can vary depending on where in Australia you are buying, as well as the size of the property.
Therefore, the amounts stated should only be used as a guide, yet they will help you to get your budget together effectively.
Mortgage-related costs – Yes, you have saved for your deposit, but this is not the only expense associated with getting a mortgage. You will also need to pay an establishment or loan application fee. This is a one-off cost that is charged by the bank when applying for a loan, and it is usually around $600. You will also need to pay lenders mortgage insurance if you have borrowed more than 80 per cent of the property’s value – this can be around $8,000 for a property worth $500,000. You may also need to pay a fee of roughly $200 – $300 for document preparation.
Title registration and insurance – It costs $75 to register the title with your state government. You will also need title insurance, which is roughly $350.
Legal fees and conveyancing fees – When buying a property, you are going to need to pay for a legal conveyancer to handle the buying process for you. Conveyancing services need to be carried out by a licensed professional. This is because they are complicated and any mistakes made can be very costly. A conveyancer will oversee two phases; the first is where the contracts are exchanged, and the second is transferring the title from the previous owner to you. There may be other legal services required throughout your property purchase, and so budgeting roughly $1,500 – $3,000 is wise.
Stamp duty – The amount of stamp duty you need to pay does depend on where you are purchasing a property in Australia. As it is state dependent, it is best to use one of the stamp duty calculators that are available online to get a better understanding of what you need to save for your home. Make sure you use a calculator from a reputable website.
Pest and building inspection – You should never buy a house without getting it inspected beforehand. This will cost you between $300 and $400, but it could save you thousands in the long run.
Other potential costs – Additional costs to consider include legal searches and enquiries, which can amount to $300. You may also need to pay the vendor for the remaining quarterly or yearly rates for your water and council services.