When looking for a home to purchase, most people look at the sale price to ensure the home is within their budget. But property lawyers will tell you that there are many other costs to consider as well. If you’ve never bought property before you may not be aware of these costs and finding out later will mean your budget may be shot to pieces.
Here is a list of the other costs you are likely to meet along the road to your first home.
- The deposit, although not an extra cost, will be required up front before the remainder of the price. If you decide not to go ahead with the purchase, you’ll lose it, so be sure before you pay up. It is usually about 10% of the purchase price of the home, but if you can afford to put down 20% you may get a better deal on the loan.
- Establishment fee. Most people have to get a loan to pay for the home and some banks charge an establishment fee to cover the cost of setting up the loan.
- A mortgage insurance fee is a one-off payment that covers the lender in case you default on the loan. It is usually required if the deposit is less than 20%.
- Mortgage registration is another one off payment that is required in this state to register the mortgage for your home.
- Formerly known as Stamp Duty, there is now Transfer Duty to pay. This covers the cost of transferring the title deeds of the property into your name. The cost varies according to the price of the property and what type it is.
- Conveyancing fee is the cost you pay to the conveyancer for all the paperwork to do with the sale. On a $500,000 home, expect to pay in the vicinity of $1700.
- The interest on the mortgage fluctuates from time to time as interest rates do. This can be a big slug and you end up paying much more than the purchase price of the home.
- If the home has not been lived in for some time – or ever – you will probably have to pay for the connection of water, power and any other utilities. This too, is a one-off fee.
- If you bought an apartment, you may have strata fees to pay, often on a quarterly basis. These are to help maintain the common areas.
- Building insurance is needed for a private lot home and will depend on the value of the home and what you want to be included.
- Mortgage account fees may also be due on a monthly or annual basis, but this depends on your lender.