Many people can get so swept up in the excitement of house hunting, that they forget to look at all the extra costs of buying a home. There are quite a few costs associated with purchasing a home. Some are specific to your loan application and others are mandatory government fees and charges.
For a lot of the extra costs of buying a home they are simply unavoidable. We break down the more common ones for you
These are fees related to the mortgage product and setting up your home loan – typically they will be things with names like Establishment, Application, Valuation, Legal or Settlement fees. The name and meaning will vary from lender to lender but the product schedule for your chosen product should clearly state the fees that apply for the product and how much they are.
This is generally known as LMI but different lenders may have different names for it. It is typically payable if your Loan-to-Value Ratio (LVR) is greater than 80% but it may also be payable for lower LVR loans depending on other criteria. No matter what name is used or at what LVR it is payable, this insurance protects the lender if you default on the loan. The amount to be paid depends on factors such as the loan amount and the value of the property. Just like other insurances, it may even be influenced by where the property is.
Read up more on LMI here
This is a Government charge and the rates vary from State to State. It is based on the value of the purchase property. In some States, stamp duty concessions may be available to certain purchasers – again, the rules and possible concessions vary from State to State so we recommend that you check with you relevant State (or Territory) Revenue Office.
For more information take a look at the website of the revenue office in your state or territory:
ACT | NSW | NT | QLD | SA | TAS | VIC | WA or you could use our Stamp Duty Calculator to quickly work out your amount
Transfer of land
This is another Government charge that is also known as Transfer Registration. It is the fee associated with registering the ownership change. As with stamp duty, this fee is based on the value of the purchase property and, also like stamp duty, the rates vary from State to State. The rates vary so much that we’re not including an estimate here. It’s better for you visit the relevant State Revenue Office site and check for yourself – use the links above to go to the relevant website.
Mortgage registration fee
Yet another Government charge. As its name implies, this one registers your mortgage. This one is a set rate – per State but typically the rates are between $100 to $200. Again, you can use the above links to check the actual amount for your State or Territory. The registration prevents someone from selling their home and not paying back the lender – because a transfer of ownership can’t happen unless the previous mortgage is discharged.
Optional costs that might (or might not) be relevant
We’ve also listed a few things that may be optional for you but we’ve included theme here so that you consider them.
It is possible to do the conveyancing yourself but most people engage a professional conveyancer or solicitor to provide advice and do the legal stuff for them. Doing so provides a level of security. But, as there are no set fees, you should get a written estimate before engaging the solicitor or conveyancer.
The seller will likely have paid rates to the Council so they’ll need to be reimbursed for any portion paid that is for after the settlement date. If they haven’t been paid by the seller, the portion owing from settlement date will be payable anyway. The amount will be identified by your conveyancer.
Strata fees/body corporate
Obviously, this cost doesn’t apply to all but, as with Council rates, the seller will likely have paid fees in advance so they’ll need to be reimbursed for any portion paid that is for after the settlement date. If they haven’t been paid by the seller, the portion owing from settlement date will be payable anyway. The amount will be identified by your conveyancer.
If you’re not buying a strata property your lender will most likely ask you to take out building insurance and state that it must be in place at settlement. If you are taking out a mortgage with Well, we will certainly require this and we’ll stipulate that it needs to be replacement cover.
This is obviously up to you – and you may already have this cover but you should consider it to ensure that fixtures and fittings included with the sale are covered. If you already have contents insurance, you will obviously need to update the address with your insurer – it may be as simple as that.
You’ll need to arrange your connections for things like water, gas, electricity and internet. Although the cost for each will be small relative to the home purchase, most will cost something.
Building and Pest Inspections
It’s a good idea to have the property checked for pest and other damage particularly for older properties. Cost of these could be around $600.
If you’re buying a strata property it may be worth considering an inspection, which examines and reports on the written records of the owners’ corporation. It is not included in the certificate that the seller is obliged to provide. It will provide relevant information about strata levies, insurances and other key items.
Mortgage Protection Insurance
You might want to consider this insurance which can be handy as it covers your mortgage repayments if you get hit by illness or injury.
You can read more about Mortgage Protection Insurance here
Removalist and storage
You might have a friend with a truck, which would be a good help. But it’s likely that you’ll need to pay a professional removalist. You may even need storage for some stuff whilst you work out where it’s going to go.
Renovations and furniture
You might be intending to make some changes to your new place so remember to think of those costs too – even just a few tins of paint can cost a bit.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.