Buying your first or subsequent homes is an exciting stage of life and while the fun may be in searching for and negotiating a purchase, there are many costs that come with the purchase that are important to factor when planning your budget for the purchase.
Stamp Duty, mortgage registration and transfer Fees
Depending on the state in which you purchase your property, will determine the amount of stamp duty or other transfer fees that may need to be paid.
Stamp duty is calculated as a percentage of the purchase price and many states will offer incentives for first home buyers with discounts on this tax.
There will also be fees associated with the setup of the mortgage that is charged by the financial institution and if you are selling a property at the same time, there may be discharge fees on your current mortgage.
Legal and conveyancing fees
A legal professional, be it a solicitor or property conveyancer will usually carry out the requirements and checks by preparing a contract for sale and handling the exchange and settlement of contracts.
They will handle any of the legalities and negotiations around the sale in conjunction with the agent and manage any of the more complex matters.
Enquiring with your solicitor or conveyancer about potential costs prior to purchase is a good way to work the costs into your budget. Many will operate with a fixed fee, however, there may be additional costs.
Lenders mortgage insurance
If you have a deposit of less than 20% or are deemed by your financial institution as being high risk, then you may find that you are responsible for the payment of the lender’s mortgage insurance.
The cost for this is calculated based on the element of risk associated with your application and may be required to be paid at settlement or be built into the mortgage repayments.
There are also fees for the establishment of your new loan, and this can be discussed with your financial advisor or institution when negotiating your loan.
Pest and building inspections
Prior to settlement, as a purchaser, you will have the option to complete pest and building inspections on the property. These will come at your cost, and these may vary depending on the type of property that is purchased.
In some cases, pest and building may already be complete and this is important to ask your agent as part of the negotiation process.
Council, water rates and strata levies
At settlement, your solicitor will calculate the amounts due for the remainder of the quarter or financial year for council and water rates and strata levies and these will be factored into the final figures at settlement.
Insurances
We cannot always predict what is going to happen and this is where it is important to have a good home and contents policy in place, beginning on the date of settlement to ensure that your new property is covered in case anything should happen.
If you are choosing to rent your property, talk with one of our property managers about landlord insurance policies that will cover your property throughout tenancies and ensure that you are covered for property damage or rent loss.