Let's buy a house.
Just figuratively, of course, but have you ever taken the time to research realistically the kind of sums required to even get started?
Asking prices are just that, and with many often-overlooked expenses waiting to strike, having the cash handy mid-hunt can save you tons of hassle towards settlement.
Here's everything to factor into your budget, and that usually narrows those initial 'price range' brackets as you start including the following new calculations.
Conveyancer Fees
Conveyancers are legal representatives hired to handle the formal and legal side of a property sale.
They'll prepare the contract of sale, exchange the contracts at settlement and finalise the purchase. Your solicitor is also being paid to provide advice on contract conditions and conduct miscellaneous tasks like requesting extensions for finance approval.
Conveyancers generally charge a fixed, mostly-inclusive fee; however, be sure to ask about the exact services included to avoid extra costs.
You'll likely need:
-
Approximately $1,200 - $2,000 depending on the firm.
-
Around $200 - $500 to cover a termination fee for a last-stage sale cancellation.
Pest & Building Inspections
Hiring a licensed professional to check your prospective purchase for infestations and structural damage is necessary.
You should consult a certified building inspector following an accepted offer for a clear idea of potential damage caused by poor construction, age, wear and tear, or more detrimental issues like mite infestation.
Newly-built or off-the-plan properties won't require pest and building inspections, however, purchasing virtually anything else will.
Think of it as an insightful investment so you can ponder any necessary repair works before fully committing to the purchase.
You'll likely need:
-
About $500 - $600, depending on the locality or area.
Mortgage Fees
Registration and transfer fees will need to be paid when securing your mortgage. Each state sets its own, ranging from a few hundred to a few thousand dollars.
The registration fee is payable upon the discharge of a mortgage, while the transfer fee covers the title transfer between the vendor and the new owner.
You'll likely need:
-
Between $450 and $4,700 depending on the state the property's located in.
Stamp Duty
The amount of stamp duty due on your purchase depends on the value of your property. This is a state government charge and is usually about 3% of the purchase price.
Stamp duty is probably the next heftiest expense, second to only your deposit.
This is essentially a fee applying to transferring property and land from one owner to another, usually costing thousands. Because stamp duty is a percentage-based fee, the amount you'll pay is determined by how expensive your home is.
Queensland, New South Wales, and Victoria do not require first home buyers to pay any stamp duty at all.
You'll likely need:
-
About 3% of the total purchase price. For example, a $300,000 property will see you paying around $9,000 in stamp duty fees.
Loan-Related Fees
Setting up and activating a loan also costs money.
Application and establishment fees are the two most common or standard costs when taking out a home loan. Depending on the financial institution, loan-related fees can be fixed or percentage-based.
Some special instances may influence banks or other lenders to ditch these fees, and organising finance through a broker could also have its advantages.
You'll likely need:
-
About $600 - $1,000+ depending on the lender and purchasing circumstances.
Lender's Mortgage Insurance
Lender's mortgage insurance or LMI is a bank-imposed fee payable by buyers attempting to purchase a property with a smaller deposit. Generally, lenders will only provide a maximum of 90% of the purchase price, meaning you'll need roughly a 20% downpayment to avoid it.
Most lenders incorporate lenders' mortgage insurance fees into the home loans themselves, allowing buyers to pay this off in conjunction with their monthly repayments. This increases your total borrowing costs, which in turn, ups your amount of interest payable.
You'll likely need:
- Anywhere from a few thousand to several thousand dollars depending on a range of personal factors regarding the buyer.
Home/Contents Insurance
Immediately following the ownership exchange, it'd be wise to enquire about both home and contents insurance policies.
These are considered both upfront and ongoing costs of owning a home and are normally forgotten about amidst the excitement of purchasing a new property.
Properties part of a body corporate structure will often already include building insurance.
Contents insurance is entirely the buyer's choice but is always highly recommended.
You'll likely need:
-
Between $120 - $150 monthly for combined home and contents insurance, or around $40 - $50 monthly for contents only.
Rates & Body Corporate
Council rates and strata fees are two of the most cautiously examined costs for property buyers. After the listing price, ongoings such as quarterly rates and body corporate fees tend to be the next deciding attributes before making an offer.
Remember that these apply to you as soon as you've taken ownership, so it's important to have these sums at the ready pre-purchase too.
You'll likely need:
-
Anywhere between $400 - $4,000 per quarter for body corporate fees depending on a property's amenities and a range of other determinants.
-
Between $400 - $1100+ per quarter for combined council and water rates.
Moving In & Set-Up Costs
Occupying your new place can be almost as luxurious or budget-friendly as you please.
Consider your move's distance, whether you'll hire removalists or rent vehicles to make things easier.
One usually disregarded moving element includes people forgetting the time cost of effectively transporting their life to a new location. For example, relocating interstate could require you to take time off work to carry out, as well as see you pay big removalist bills for the trouble.
Then, you'll want to fit out and decorate, right? Did you save some cash for furniture and renovations too?
You'll likely need:
-
About $500 to $4,000 for the average local move. Relocating interstate could cost you up to several thousand on removalists alone, depending on distance and how many personnel you'll need.
So, what's the lesson?
Realising that a home's cost only begins at the listing price while understanding the true figures involved is the primary takeaway here.
Remember that maths comes before emotion, ensuring you're prioritising affordability over dreams.
Whilst allowing self-discipline to prevail and grasping the consequences of spending above your means, the main lesson is to ensure you're acquainted with the realistic costs of entering the property market.
Go and see what's around and enjoy the search!