The 8 hidden costs of buying a property

March 8, 2018
Couple moving boxes into new home

There’s no denying that getting a foot on the property ladder is expensive, especially for first time buyers living in one of Australia’s main cities.

couple sitting at table with accountantApart from saving up for a deposit, there are a range of other costs that can really weigh heavily on your finances.

We take a look at the hidden costs, so you can be prepared for what’s involved in buying property.

Inspection fees

Buying a house, especially an older property, without a professional inspection by a builder or pest technician is downright risky.

There could be structural issues, unseen damage, a pest infestation or a termite problem.

A professional inspection will give you peace of mind about purchasing the property and living in it or renting it afterwards.

You’ll want to set aside approximately $600-$1000 for inspection fees.

man inspecting houseStamp duty

This is a government tax charged for the cost of transferring a property from one owner to another.

Rates vary from state to state, based on purchase price, location and loan purpose.

In general, the more the property is worth, the more stamp duty you’ll pay on it. Different rates can also be charged if the property is to be used as a residential home or an investment.

If you’re a first home buyer you may be eligible for a discount or exemption from stamp duty.

Mortgage registration & transfer (state fees)

Most people will require a mortgage when buying a property, but the government requires it to be formally registered and will charge you a fee to do so.

Again, this varies for each state from approximately $115 in Victoria to $200 in Queensland.

Transferring the property into your ownership also incurs a fee. If you live in NSW you’ll only pay a flat fee of $138.80. In Queensland, Victoria and South Australia, the transfer fee is in the thousands.

Mortgage establishment (bank fees)

Not to be confused with mortgage registration fee, a mortgage establishment fee is charged by banks for the privilege of taking out a loan with them.

This varies from bank to bank, but is generally in the vicinity of $500-600.

Under certain circumstances, such as a special promotion, the lender may waive their fee, so it pays to ask.

Mortgage Insurance

If you have less than a 20 per cent deposit saved then you’ll likely have to pay lenders mortgage insurance.

In a tight lending market, banks will charge you a monthly insurance premium in order to protect themselves if you default on your mortgage, or if your home is sold for less than what they’re owed.

Conveyancing and legal fees

While you can technically buy a home and complete the legal aspects of it yourself, it could cost you more in the long run if you don’t do this properly.

It’s best to pay an extra $1,500 – $2,000 for a professional conveyancer to prepare the relevant documents so you avoid financial liability.

Moving costs

Many first time buyers are so focused on the ‘important costs’ of buying property that they forget to put aside money for moving.

When the time comes, you’ll need money for packing supplies and to pay for a moving company or hire truck.

Couple moving boxes into new homeYou can save money by researching a few companies ahead of time and getting multiple quotes.

Cheapest is not always best, so read reviews and ask friends for recommendations.

Moving in costs

After you finally get all your belongings into your new home there’s another set of costs waiting for you. These are the costs you’ll need to pay when setting up your home. These include, but are not limited to:

  • Home and contents insurance
  • Utility connection for water/electricity/gas/internet
  • Council fees
  • New appliances
  • New furniture
  • Cleaning products and/or hiring a cleaner
  • Takeaway/easy meals for your first week

Now that you know what extra costs to expect, you can start putting together a budget before you go house hunting.

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