The hidden costs of buying a home

Buying a house isn’t just about paying what’s on the property’s price tag. There are some extra costs all buyers should be aware of. 

So how much are these hidden costs exactly?

Perhaps unsurprisingly, it depends on the value of your property and where it’s located.

Conveyancing & legal fees

Estimated costs: Around $1800

While it is possible to complete the legal aspects of buying a property yourself, it’s generally recommended that you engage a conveyancer or solicitor to prepare the documents for you and provide advice.

The estimated costs of legal fees is around $1800, but can be significantly more, if the ownership structure is complex.

Stamp duty

Stamp duty can cost tens of thousands of dollars. The exact amount depends on the value of the property and the state in which you buy it.

The more expensive the home, the more you’ll pay. For example, a $1 million purchase can attract stamp duty as high as $55,000.

Fortunately, most states offer stamp duty exemptions and concessions to first-home buyers.

Pest & building inspections

Estimated costs: Around $600

Having the property checked for pest and other damage can be one of the hidden costs of buying a house. These checks are particularly important for older homes.

While buyers often baulk at the extra costs, it’s money well spent.

We’re seeing a lot more people not doing those inspections, because they don’t want to spend more money. Realistically, the pest inspection is the most important thing.

Mortgage registration & transfer fees

Estimated costs: $116.80 in Victoria – $187 in Queensland

You’ll need to pay for the privilege of formally registering your mortgage. And, as the new owner, the cost of transferring the property into your ownership will fall to you, too.

Mortgage registration fees vary from state to state, from $116.80 in Victoria to $187 in Queensland.

Transfer fees, on the other hand, are generally more expensive, ranging from a flat fee of $141.60 in New South Wales, to thousands of dollars in South Australia, Victoria and Queensland.

Loan application or establishment fee

Estimated costs: At least $500-600

When you take out a home loan, you don’t simply pay back what you borrow – you also have to pay to set up the loan in the first place.

The application fees are generally around $500-600, though they can be more than $1000, depending on the loan and lender.

It’s worth noting, however, that some lenders will waive this fee under certain circumstances, so it’s worth asking.

Mortgage insurance

Without a deposit of 20% or more, most lenders will require you to pay lenders mortgage insurance.

This fee is calculated on a sliding scale: the smaller your deposit, the more insurance you’ll pay. On a $500,000 home with a 10% deposit ($50,000), you’ll be asked to pay insurance of around $8000.

The insurance amount may seem like a lot, but it allows buyers to purchase a home with as little as 5% of the purchase price as a deposit, helping them to get a foot on the property ladder sooner rather than later.

Council and utility rates

After purchasing the property, you’ll need to pay the vendor for council or water rates.

The vendor will have paid any rates owing to the council – generally until the end of the quarter – and they’ll simply add your portion of that amount to the purchase price.

Source – https://www.realestate.com.au/advice/hidden-costs-buying-home/