The Costs Of Purchasing A Property: Your Peasy Guide
Costs Of Purchasing A Property: Your Peasy Guide
You likely feel confident about what you can spend on your first home. The hours spent browsing real estate sites, Saturdays spent dragging your partner from one open house to another. You’ve made the proper calculations, and are ready to join the ranks of home ownership. The price a property is listed at, however, is just one of many expenses to consider when you’re buying your first home. We’ve put together this Peasy guide to help you navigate the primary costs you need to think about so you aren’t caught unaware when buying your new home.
Loan deposit
Let’s start with a big one. In order to avoid mortgage insurance, most lenders require 20% of the sale price of the property will need to be paid up front as a deposit to secure your home. It is important to make sure you’ve made these arrangements before you make an offer.
Loan application and establishment fee
Processing fees are part of taking out a home loan. An application fee is often waived if you are applying for a packaged product as the annual fee, usually $395, covers that. A settlement fee though is usually anywhere from $200 to $500.
Mortgage insurance
It is possible to not put down a full 20% deposit on your new home, however, in such cases your lender is likely to require that you pay what is called lender’s mortgage insurance. LMI (as we call it in the industry) may be necessary in other scenarios as well, you can talk to your Peasy mortgage advisor to have them help you calculate the exact costs.
Valuation fee
Your lender needs to do a valuation of the property you want to purchase before settlement, the cost is generally around $250. Although is usually waived for a packaged product. Your Peasy broker also has access to many lenders that waive this cost, so is always good to check.
Conveyancing and legal fees
A conveyancer can help you navigate the legalities of buying property to ensure a smooth purchase experience. The cost varies, but expect to pay around $1,800 for conveyancing and legal fees.
Stamp duty
The tax you pay for buying your new home is called stamp duty. It varies by state, and many states have exceptions for first time home buyers. Your Peasy mortgage advisor can help you calculate what you will need to pay.
Mortgage registration
The government requires you to register your mortgage, and the fee varies between states, but will cost you less than $200.
House inspection reports
Building and pest inspections help you make sure there are no hidden problems with the property you are buying, and are an essential part of the process. You don’t want to end up dealing with termites or structural problems that are expensive to fix. Costs vary, but average around $600.
Strata inspection reports
Strata reports are necessary if you are purchasing an apartment or unit. This covers any issues with the building, and identifies any future expenses you may incur because of it.
Council rates
Once you move into your new property, you’ll start paying council and water rates. These rates are calculated based on the value of your home and vary from council to council. The selling agent will be able to tell you what you will be paying as an ongoing expense.
Strata fees
If you are purchasing an apartment or unit, you may have strata fees as an ongoing expense. This generally covers common maintenance costs for the property, like shared spaces and driveways.
Insurance
You will be required to have home insurance by your lender, and you’ll need to have this arranged before you can settle. It’s a good idea to shop around, as insurance rates vary greatly.
Removalist costs
It’s finally move in day! Don’t forget to budget for removalist costs to make your move in day as smooth as possible. Congrats, you’re finally home.