Are you thinking of financing your first home? In this guide, we will be sharing with you a rough estimate of the costs to look out for as a first home buyer as every dollar counts.
This will help you understand the hidden costs of buying a property and make an informed decision when buying a property in Australia.
Do take note that the numbers mentioned below are just an estimate and the actual amount varies depending on the state you reside in.
Before you make your next move: Discover the often overlooked expenses in our detailed guide on hidden costs when buying a house.
Stamp Duty Fee
Stamp duty is a form of tax imposed by the State government which is different for each State or Territory when buying and selling a property.
Stamp duties are usually paid within 30 days of buying a property with the amount being determined by the value of your property.
Furthermore, each state has its own rates typically ranging from 3-4% of property value. To get a rough estimate of your stamp duty fee, feel free to use the free calculator tool below.
Stamp Duty Calculator from calculatorsonline.com.au
Buyer’s Agent Fee
A buyer’s agent works exclusively for you as the home seeker to find, negotiate, and help you purchase a property specific to your needs.
They’re typically able to do home hunting within a 60-day window.
Comparing to the average 6 months period homebuyers would take if they were doing it themselves, buyer’s agent are typically favoured for their efficiency.
This is largely due to their pre-existing relationships with developers and their access to the pool of properties on the market. If you’re lucky, they might be able to get you properties that aren’t even on the market yet, bringing you ahead of the competition.
Contracting a buyer’s agent comes at a cost typically ranging from 1-2.5% of the purchase price. For an $800,000 property, this would be $8,000-$20,000 but you’re essentially paying for the convenience of finding properties and even the access to exclusive properties.
Conveyancer/Solicitor
Conveyancers and solicitors are people that are hired to take care of legal and administrative work associated with the transference of ownership from one person to another.
This means doing things such as conducting vital searches with local authorities on building plans, strata management or checks on sewerage systems to ensure that the property does not come with unforeseen issues.
They also liaise with the seller’s solicitor or conveyancer to check the contracts drawn are complete and ready to be executed when the title is being exchanged.
Conveyancers are important when it comes to communicating with the banks regarding your loan settlement as they provide mortgage lenders with transactional information from a legal perspective.
Conveyancers are typically engaged by first home buyers while solicitors are engaged by property investors dealing with pricier properties.
Conveyancers typically cost between $1,400 and $1,800 while solicitors can cost up to around $2,500.
Deposit
Deposits are something to consider before buying your property. The amount you pay typically ranges from 5%-20%
Many lenders now require a deposit of 20% while traditional banks accept 5% as the minimum.
Do take note that you’ll typically be required to pay Lender Mortgage Insurance if your deposit amount falls below 20%.
Furthermore, the timeline of deposit payment differs depending on the type of sale. Private sales requires payment to be made upon exchange of signed contracts with vendor. For auction sale, contract signing and payment for deposit is done on the same day.
Also be aware that should you not be able to settle on the full loan at time of settlement, the deposit will typically be forfeited to the seller, so its important to ensure you have your full home loan approval by the stage you put down your deposit (and not just a pre-approval).
Council rates
Every state you reside in has a council, which. is in charge of town planning through the management of public assets.
Council rates are implemented by different states to collect rates from residents and businesses in its municipality. The collected rates will then be utilised when they draft up an Annual Business Plan between April and July each year with this document laying out the allocation of rate payer funds to different town planning needs.
The amount you pay varies depending on the state that you reside in and council rates usually equate to around $4 per day for the average Australian household.
With council rates being an essential, you can expect a frequent upkeep of your community such as footpath maintenance to even waste disposal plans.
Inspection fees
It is common practice to get a building and pest inspection for your home done to gain insights on the structural integrity of the building.
Reports like these will inform you of any potential problems which might bring costly repairs when you move in.
If you’re planning to stay in units and strata dwelling, a strata report inspection is useful for you to understand the past and planned maintenance work as well as the fees to be paid. Inspections usually cost around $450-$800.
Land tax
Land tax is an annual tax payable by owners of the land. Owners are not taxed if the land their home is the only property they own.
Land tax is administered everywhere except for Northern Territory and it varies from states and tiers. You can refer to the Australian Tax Office for more details.
Moving and utility cost
Once you’ve moved in to your new home, you will need to find providers to set up various utilities such as electricity and gas.
Removalists are also essential to help you move your items over to your new house.
Providers vary in different prices and as a general tip, it’s best if you’re able to get 3 price quotes and compare from there after doing research.
Free Soho Concierge
If you’re looking to save money, time and effort, Soho offers a free service called Soho Concierge, which offers to do just that for you.
Our team of experts take the hassle out of moving by making the calls to get the best deals for your home service essentials such as internet access, electricity, insurance, removalists, etc.
Book a call with us here.
With that, we hope this has helped you to understand more about the different costs one needs to plan for when buying a property. With this understanding, you’ll be able to do better budgeting and have easier financing plans in the long term.
We recommend that you still do a consultation with a financial advisor or a conveyancer or solicitor to work out your finances.
If you need moving services, Soho concierge is available for your service where a phone call is all it takes to find basic home service providers like electricity and removalists.
