Extra costs when buying property

When buying a home there’s some costs you expect and some you don’t. To help you avoid any surprises we’ve put together a list of things you might need to think about when working out your budget.

Not all of the following costs apply to all situations—so think about which ones might to yours.

Stamp duty

There are two types of stamp duty you need to be aware of:

• Duty for the property transfer.
• Duty for the mortgage.

The state and territory governments charge stamp duty, so the amount will depend on where you buy the property. It will also vary according to the purchase price of the property.

If you are a first home buyer there are some stamp duty concessions but for all other buyers this can add quite a bit to the cost of purchasing a property.

For more information take a look at the website of the revenue office in your state or territory:

ACT | NSW | NT | QLD | SA | TAS | VIC | WA

Pest and building inspections

Pest inspections can be relatively cheap, particularly when compared to the cost of dealing with the problem after the property is purchased.

Building inspections can cost up to $1000—depending on the size of the property—but once again the cost is dwarfed by the potential cost of dealing with a major building issue.

Talk to your legal rep about these inspections—they’ll often organise them on your behalf.

Aussie Fact Sheet: Pest and Building Inspections

Real estate agent's fees

If you’re selling your current home and buying another you’ll probably sell through an agent and there will be an agent’s commission to pay.

First home buyers don’t have to worry about paying commissions.

Legal costs

The are a handful of legal costs involved in a property transfer:

• Conveyancing—You need a professional to legally transfer ownership of the property you are buying or selling. The services of a conveyancer or legal rep are generally around $1000.
• Searches—Your legal rep will need to perform property and title searches to be sure that the seller is legally entitled to sell the property. If you’re moving into a strata property, then your legal rep will probably arrange a strata inspection and a check of the strata corporation’s records.

Borrowing costs

There may be a range of fees imposed by your lender such as application, Valuation and Settlement fees.

Make sure you ask your lender or broker about these fees.

Insurance

There are a few types of insurance you might be up for:

• Lenders Mortgage Insurance—if you have to borrow more than 80% of the purchase price of the property, you’ll need to pay Lender Mortgage Insurance (LMI). This type of insurance protects the lender if you default on the loan. The amount depends on the amount you borrow.
• Building insurance—if you’re not buying a strata property your lender will probably ask you to take out building insurance dated from the time of exchange.
• Contents insurance—a good thing to get from time of exchange if you want to cover fixtures and fittings included with the sale.
• Mortgage protection insurance—this is not necessary but can be handy. It covers your mortgage repayments if you get hit by illness or injury.

Other things to think about

• Moving costs—unless you have really-really good friends with a truck you’ll need to pay for removalists and possibly storage.
• Council rates and strata fees—the seller is responsible for rates up and until the day of settlement but you’re responsible from the day after settlement.
• Renovations and furniture—do you need whitegoods? Are you planning to freshen up the place with some paint and new carpets before you move in? You’ll need to count these costs as well.

Continue to information about the first home owners grant.