Buying the house of your dreams implies more costs than the initial price tag of the property. All responsible buyers should be knowledgeable regarding the hidden costs linked to purchasing a house.
To start with, stamp duty is one of the primary expenses associated with getting a house. In fact, it might cost you up to thousands of dollars, depending on the price of the home and the state you live in. As a general rule, though, the more expensive the house, the higher stamp duty you’ll have to pay. For example, a house worth $1 million implies stamp duty costs of $55,000.
Nonetheless, first-home buyers might enjoy some privileges. If you live in New South Wales, Victoria or Queensland, you won’t pay stamp duty on a $500,000 house.
Conveyance & Legal fees
If you want, you can prepare the legal documents for the purchase yourself. Typically, though, it’s advisable to request the assistance of a professional conveyancer or solicitor to provide guidance and complete the documents on your behalf.
The estimated cost of these fees is approximately $1,800. Nonetheless, considering that the ownership structure is complex, the costs might be higher than that.
Pest & Building Inspections
When you intend to purchase an older house, it’s recommendable to have it checked for pest and additional damage. It is needless to say that this aspect is fundamental to your family’s health and wellbeing.
As a matter of fact, experts outline that this is money well spent. Nevertheless, some homeowners are willing to splurge and take the risk, instead. Still, from a realistic point of view, these inspections shouldn’t be overlooked. The estimated costs reach $600 or something around that figure.
Loan Application or Establishment fees
The loan application and establishment fee are two additional expenses you should consider. These fees are, typically, somewhere around $500-600. However, in some cases, they could go over $1,000.
It all depends on the lender and the size of the loan, as you might assume. Note, however, that some lenders might be willing to relinquish this fee in certain scenarios.
Mortgage Registration & Transfer fees
Other costs that you should keep in mind are the mortgage registration and transfer fees. You, as the new owner will be required to transfer the property to your ownership.
Similar to other costs, each state has different fees. For instance, registration fees cost around $114.90 in Victoria and approximately $181 in Queensland. Still, these fees can go much higher than those figures in other states.
If you are unable to provide a deposit of 20 percent or more, the majority of lenders will require mortgage insurance. Evidently, the smaller the deposit, the larger the mortgage insurance required. For instance, if you provide a 10 percent deposit for a $500,000 home loan, the insurance costs might reach $8,000 or more. Still, thanks to this insurance, Australians may purchase a home with as little a deposit as 5 percent.
In summary, as you can see, buying a home might be your priciest purchase. While becoming a homeowner comes with evident rewards, you should consider the hidden costs, as well, to make the best financial decision for your situation.