As you would know the major cost involved in buying a house or apartment is the purchase price, but there are a number of extra costs that come with buying a home.
Taking time to plan and budget for the complete costs associated with buying a house or an apartment will help ensure you are not faced with any surprises that may cause issues with the property settlement process.
Here is a look at what is often called the hidden costs of buying a house or apartment.
Home loan deposit
Your home loan deposit is the initial contribution a buyer makes to the purchase price of a property. The larger your deposit the less you need to borrow. Which means you will pay lower monthly repayments and lower interest costs over the lifetime of the loan.
Talk to Oxygen Home Loans about how much you have saved, how much you could borrow, whether you can afford to buy a house or an apartment and whether you will need Lenders Mortgage Insurance.
To help you work through a number of scenarios and help plan your financial situation. Select from the list of savings, tax and loan calculators here.
Purchase price of the property
This one is fairly obvious, but as we are listing all the costs of house or an apartment we feel it is important to include. Once signed contracts are exchanged between the buyer and seller, the buyer is expected to pay the deposit on the property. This is normally 10% of the purchase price.
Depending on the settlement terms in the contract you will then be expected to pay the remaining balance of the purchase price on settlement day. You need to ensure your finances are in order for this.
Loan costs when buying a house or an apartment
Application fees when buying a house or apartment
This is a one-off cost to apply for a loan and covers bank fees and settlement attendance fees. It will cost between $500-$1,000.
Necessary to determine how much a property is valued at so a lender can be reassured they will be able to recoup their loan if they were forced to sell the property due to the buyer defaulting on their payments. Expect to pay about $200-$300.
Monthly service fee
Costs of lender administration on the loan and may include charges for redraw or prepayment of a fixed rate loan. The cost per month can range from $5 to $15.
Some lenders charge annual fees on their home loans. Talk to your lender about this. Annual fees vary, but they usually range between $250 — $450.
Search processing fee
The cost to search for a title related to the property you want to purchase. It can also include other searches connected to your loan application and will cost $40-$60.
Stamp duty on buying a house or property
This tax is paid in each State and Territory in Australia when you buy a property. The amount payable depends on factors such as the location of the property and if you are eligible for any concessions or exemptions. First homebuyers may qualify for a reduction on stamp duty, but you need to contact the appropriate body in your State or Territory to understand how much you will need to pay.
Insurance costs when buying a house or an apartment
Home and contents
Homeowners usually bundle their home insurance policy with a contents policy to cover them for the cost of rebuilding or repairing in the case of storm, flood or fire or theft.
Prices on insurance policies vary, so it is a good idea to get two to three quotes.
Lenders Mortgage Insurance
If the deposit for your property is less than 20 per cent of the value, your bank may ask you to take out Lenders Mortgage Insurance. The amount you are required to pay depends on the size of your loan and your lender.
Pre- purchase inspection costs
A pest inspector will investigate a property inside and out to check for the presence of damaging pests. They will check any roof or floor cavities and external buildings. If pests are detected then inspection reports can help work out what treatment should be taken.
As a homebuyer it is highly advised to have a building inspection done to check the current condition of the property and any potential problems in the future.
Building inspectors are often licensed professionals and are skilled at identifying issues. They will compile a report for you detailing the condition of the structure. This is a very important inspection to ensure you are aware of any issues before you buy the property.
Expect to pay approximately $350 for both a pest and building inspection.
Conveyancer or solicitor fees for buying a house or a property
Buying a property is a legal process and while you are not required to have a conveyancer or lawyer manage the settlement, managing the documentation and settlement of your property sale can be complicated. Having a team of experts familiar with the legal documents and legislation within your State or Territory, can provide you peace of mind and ensure the process runs smoothly.
The fees vary depending on the complexity of the purchase.
With all the fees and duties payable on buying a house don’t forget to budget for practical costs:
- Moving costs
- New furniture
- Strata Fees
- Council and water rates
A final word
Being aware and prepared for the extra costs of buying a house or an apartment can ensure you are not hit with any nasty surprises down the track and can help the ensure the purchase process runs smoothly.
Other buying a house or apartment tools and information
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