Beyond the Deposit: the Extra Costs You Should Know About

Buying a home is not necessarily as easy as saving up a deposit for a block of land or established property. Along with allowing yourself a budget that works for you, there are extra costs that aren’t advertised when entering the property market. Preparation is essential, so it’s important to factor in these costs when deciding to take the first step.

There are two types of costs when purchasing a home; the fees and charges when arranging a home loan, and the costs involved with buying the physical property.

Stamp Duty

The first type of stamp duty concerns your property transfer and the second is for your registration of that transfer. The amount you pay usually varies depending on your purchasing price as well as where the property is located. First home buyers building their first home may be eligible for some concession when it comes to this duty. However, even with the concession, it is important to factor it into your budget.

Pest and building inspections

There is nothing worse than moving into a home and finding out the foundation is faulty or the house is termite ridden. That is why pest and building inspections are a necessary cost when purchasing a property. The cost of getting those checks right from the word go will be cheaper compared to dealing with a bigger issue later on.

Legal Costs

One of the Legal cost involved in the buying process includes conveyancing fees, which is where a professional legally transfers the ownership of the property. Another is the fee for legal searches and inquiries, which determine whether the seller is legally entitled to sell, or if there are any encumbrances on the property.

Borrowing costs

The borrowing costs of getting a home loan include application, valuation, settlement, and mortgage registration fees. Your mortgage broker will be able to explain these costs in more detail.

Insurance

When building, buying or taking out a home loan, there are various types of insurances you’ll come across. The Lender Mortgage Insurance will apply to your home loan if you want to borrow more than 80% of the purchase price of the property. Other forms of insurance include building insurance; content insurance, which covers you from the time of exchange; and mortgage protection insurance.

Other costs to factor in

These costs include things that occur once your property is purchased, built, or settled. These things may be moving costs, council rates and strata fees, and renovations and furniture.

While the list seems quite long, the costs can be covered if you prepare well, and budget for them. A reliable mortgage broker will be able to help you through the process of understanding all the relevant terms and costs involved with purchasing a home for the first time.

At Select, we offer no-obligation, quality, and free advice to help you reach your financial goals. If you are interested in purchasing your first home or are unsure about the variety of fees involved, give us a call on (08) 9417 3399 to organise an appointment with one of our friendly brokers.