The hidden costs of buying a home!
Buying a house is not just about paying what is on the property price tag. There are some extra costs all buyers should be aware of.
So how much are these hidden costs?
Perhaps surprisingly, it depends on the value of your property and where its located.
For example, if your property is valued at $500,000 you can reasonably expect to pay the following:
- Property value: $500,000
- Conveyancing and legal fees: $1800
- Stamp duty: $0 for first-home buyers, $8750 for others
- Building and pest inspection (combined): $600
- Mortgage registration fee: $187
- Transfer fee ($35 for every $10,000 over $180,000): $1120
- Loan application fee: $500 – $600
- Mortgage insurance: $8000
- Council and utility rates: roughly $800 (per quarter)
- Home and Contents Insurance : estimate $2,000 pa
- Total costs = $515,007 – $523,857
- Conveyancing & legal fees
Conveyancing and legal fees are the costs associated with engaging a conveyancer or solicitor when buying a home to ensure a smooth purchasing process.
As specialists in property sales contracts, Conveyancers and Property Lawyers will ensure all searches and investigations are done prior to the contract going unconditional. They also attend to transfer documentation and the settlement process.
It is an essential part of the buying process, so understanding the costs associated with it can save you from an unexpected bill down the line.
- Stamp Duty
Stamp duty is the tax you pay on a particular transaction and documents. In this case, it refers to the tax you have to pay when purchasing a property.
The exact amount of stamp duty depends on the value of the property, whether you are an owner occupier or investor and the state in which you buy it. Many states also offer concessions for owner occupier first home buyers – in Qld the Stamp Duty concession is $8,750.00 if you are buying an established or newly built home up to $550k.
https://www.westpac.com.au/personal-banking/home-loans/calculator/stamp-duty-calculator/
The more expensive the home, the more you will pay.
- Pest & building inspections
Pest and building inspection fees are payable when you engage with professionals to inspect the house to check for any problems.
It is important to determine whether a property has any major issues, such as structural or foundation or pest infestations. The reports provided are comprehensive and can assist with your price point and provide comfort you will not be hit with any nasty surprises down the track.
Engage a Licenced Inspector, who knows the properties in your area and is experienced in your type of property.
- Loan application or establishment fee
Loan application or establishment fees are the application costs associated with considering and setting up your mortgage.
Application fees typically range from $500 to $600, but they might exceed $1,000 depending on the type of loan and the lender.
- Mortgage registration & transfer fees
Mortgage registration and transfer fees are the costs associated with formally registering a mortgage and transferring the property ownership upon buying a home.
For the opportunity of formally registering your mortgage, you will have to pay a fee. You will also be responsible for the expense of transferring the property into your name as the new owner.
- Lender’s Mortgage insurance
Mortgage insurance is a mandatory cash deposit required to enter a home loan and secure a property.
Most lenders will require you to pay mortgage insurance if your deposit is less than 20% of the purchase price.
This change is based on a sliding scale: the lower your deposit, the more insurance you will pay. You will be requested to pay roughly $8000 in mortgage insurance on a $500,000 home with a 10% deposit ($50,000).
Although the insurance premium may appear high, it allows purchasers to put down as little as 5% of the purchase price as a deposit, allowing them to climb on the property ladder sooner rather than later.
- Council and Utility Rates
Council and utility rates are fees you pay for services provided by your council to your property. Generally, these fees are due on a quarterly basis in advance.
If the vendor has paid these fees in advance, this will be charged to you on a pro-rata basis.
- House and Contents Insurance
Insurance on your new home is vitally important. In Qld, insurance must be taken out as soon as you have a signed contract.
Cost of insurance varies, based on the value and type of home you purchase and the insurance company you use.
- Body Corporate (Units/apartments only)
A managing body corporate administers common property or common areas in multi-unit developments. By buying an apartment, townhouse or duplex the owner is automatically part of the Body Corporate for that complex.
The fees associated with body corporate cover anything from building insurance and maintaining common area. While these fees are another expense for a property investor or homeowner, they are necessary to maintain, repair and insure the property.
Body corporate fees depend on the property size, age, condition, maintenance schedule and strata committee. Costs generally are as follows:
No lifts | $2,000 per annum
1 Lifts | $3,500 per annum
2 Lifts | $5,000 – $6,000 per annum
