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As one of the most expensive purchases most people will ever make, it's important that homebuyers understand all the costs involved with buying a house.
Buying a home involves more than just the purchase price of the house itself. If you are looking at the latest land release in Clyde North, there are additional costs that you may not be aware of, that will greatly affect the overall amount you pay.
Here are some hidden costs for homebuyers to be aware of:
The State Government charges land transfer duty, known as stamp duty. This amount is calculated on a sliding scale based on the value of the property. The more expensive the home, the more you’ll pay for stamp duty.
Some exemptions with stamp duty include exemptions for first home buyers up to the value of $600,000. There are also discounts available on stamp duty for up to $1 million until 30 June 2021.
Stamp duty is an important cost for homebuyers to be aware of when considering buying a home, as it can add a substantial amount to the overall cost.
When you apply for a loan, many banks and financial institutions charge a loan application or establishment fee to cover the cost of processing and admin for your loan. These fees include set-up costs.
Loan application fees can vary according to the provider, and in some cases, you may be able to negotiate a waiver.
To apply for a home loan and secure a property you are required to provide a deposit. It is generally recommended you have a 20 per cent deposit. This is because if you have less than 20 per cent of your deposit, your lender will require you to take out mortgage insurance (LMI) to cover them for any losses in case you can’t settle your loan.
This can be paid off as a one-off upfront fee or added to your loan to be repaid in instalments.
The LMI amount is calculated on a sliding scale. This can result in you paying thousands of dollars depending on the size of your loan, which is why it is recommended to save as much of your deposit as possible before buying a home.
Some lenders may charge monthly or annual fees to cover the administration and servicing of your home loan.
This amount will vary depending on the lender and the type of loan.
Lenders often engage the services of an independent valuer to visit a property and assess whether or not you’re paying a reasonable price.
The cost of this will vary, but it may result in you saving on the purchase price of your home.
The State Government charges a one-off mortgage registration fee when a home loan is established.
This registers a property as security for the loan and allows future buyers to check any claims against the property.
Having builders insurance in place from the day you sign the contract of sale is essential. This ensures you are covered in the case of fire or storm damage before you even take possession of the house, and you don’t get caught up in any legal issues of who pays for accidental damage caused in the period between signing the contract and you taking possession.
Contents insurance covers not just personal belongings but also carpets, window furnishings, washing machines and fridges. You should get contents insurance as soon as you start moving your belongings into your new home.
Transferring the ownership of a property title from one person to another involves numerous legal and administrative requirements.
You’ll likely need to engage the services of a solicitor or conveyancer to review the contract of the sale for any errors or red flags, undertake title searches to confirm the property is legally owned by the vendor and that there are no debts or liabilities attached to it. Some people may choose to do this themselves, however it is recommended to get a professional conveyancer to ensure a thorough review so nothing is missed.
They will also help organise supporting documents needed by your lender for settlement.
A building inspection is crucial for discovering any issues with the home that could be costly for you later.
For a pre-existing home, this will involve checking for signs of major or minor defects, safety hazards, structural problems, hidden moisture issues and presence of termites or other pests.
For a new home, a building inspection will check the quality of construction and give peace of mind that you’re getting what you pay for.
A building inspection can save you in the long term if you find an issue upfront, and may help you negotiate on the sale price of the property.