Costs of purchasing a home

Costs of purchasing a home

You’re trawling real estate sites, and popping into open houses every Saturday. You’ve done your calculations, spoken to your mortgage adviser, and know roughly what you can afford to spend on your first home.

The advertised price of the property, though, is only one expense to consider when buying your first home.

So that you aren’t caught unawares, we’ve pulled together the main costs you will need to think about when purchasing your home.

Home Loan deposit

To secure your home, you will need to put down a deposit. Usually this is 20 per cent of the sale price. As you need to pay the deposit up front, make sure you’ve made arrangements before making an offer on a property.

Loan application and establishment fee

When you take out a loan, you will incur loan processing fees. This fee will vary between lenders, but is usually no more than $750.

Mortgage insurance

If you are not paying the full 20 per cent deposit on your home, your lender may require you to pay lender’s mortgage insurance (LMI). LMI may be payable in other circumstances as well . Your Smartline Adviser can help you calculate these costs.

Valuation fee

The lender will need to arrange a valuation of the property before settlement, which usually costs around $250.

Conveyancing and legal fees

There are intricate legalities to buying a house. Most people opt for hiring a conveyancer or lawyer to ensure the transaction is smooth. Conveyancing costs vary, but are often around $1,800.

Stamp duty

Stamp duty is the tax you pay for purchasing a property. Stamp duty varies from state to state, and there are often exceptions for first home buyers. Use our Smartline’s stamp duty calculator to work out what you will need to pay.

Mortgage registration

You will also need to pay a fee to the government to register your mortgage. Again, these fees vary between states, but are less than $200.

House inspection reports

Arrange building and pest inspections before you settle on your property. You need to know there are no hidden problems, like termites, or structural damage. Building and pest inspection costs vary, so talk to your Smartline Adviser or real estate agent about who they can recommend. An inspection can cost around $600.

Strata inspection reports

If you are purchasing a unit or apartment, you will need to organise a strata report, which will list any current issues with the building, and identify items that will incur future expenses.

Council rates

All property owners need to pay council and water rates. These rates vary between councils, and are calculated on the value of your property. Talk to the selling agent about council rates you will be expected to pay, as these are an ongoing expense.

Strata fees

If you are buying a unit, you may be up for ongoing strata fees, which are put towards maintenance costs for the common property, like driveways and foyers.

Insurance

The lender will require you to have home insurance. This needs to be organised before you settle. Insurance rates vary, so shop around. There are different types of home insurance you can take out, too, including home, home and contents and life insurance.

Removalist costs

Once you’ve purchased your property, you will need to move in. Make sure you’ve budgeted for removals costs.

Your Smartline Adviser can help you calculate your costs, so make sure you book an appointment to have a chat.