Costs Associated With Buying a Home

  • Posted 17 Jun
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Costs Associated With Buying a Home

So you’ve decided to purchase your first home – you must be excited, happy in the knowledge that you and your family are going to have their very own piece of land to call their own; a place where you can make changes without checking with a landlord and where you can add your own touch of flair.

It can be easy to get caught up in the whirlwind of buying a home, but there are some hidden costs associated with purchasing a house that you should be aware of if you are to be successful in retaining your house further down the track.

Firstly, let’s start off with the costs you probably already know about.

Know Costs of Buying a Home

  1. The first cost is that associated with your home loan lender. You’ll likely have to pay lender fees plus there is the ongoing cost of your monthly mortgage repayment. Make sure you research to find the best home lender as fees vary and you can often find some great package deals.
  2. Government fees always apply when buying a home, and these can include land transfer registration fees and any government taxes. These fees will be made up of various flat fees and some variable charges that will depend on the price of the property you purchase. Check your state to see what flat fees are applicable. This is where utilising a quality mortgage broker can help, as they will assist you in these matters. Try our buying costs calculator for an accurate calculation in your state.
  3. Another cost is that of stamp duty and this varies from state to state. Stamp duty can add a significant cost to your house, so it pays to check out what you’re going to be required to pay before you sign on the dotted line. If you’re a first home owner, you may be able to access a reduced stamp duty rate, depending on your state.
  4. You’ll need mortgage insurance for the life of your home loan, so it’s important that you factor this cost into your ongoing home costs. Mortgage insurance protects the lender more so than it protects you and it is often a mandatory requirement for loans with less than a 20% deposit. Speak with your lender or mortgage broker for details about these costs.
  5. There will be legal fees associated with buying your home and these will vary from state to state and also by legal profession. These fees can be considerable, so it pays to compare quotes before choosing your legal team. Your mortgage broker may also be able to provide recommendations as well. You need to make sure that they are properly qualified and that they have experience dealing with buying and selling home’s as well.
  6. Other fees to consider are building inspection and pest inspection fees. It’s recommended that you have both performed on any house you are looking to purchase, prior to going unconditional on an offer. This will ensure that your new home doesn’t have any foreseeable structural or pest issues.

Costs You Might Not Have Factor In

Below are some of the costs you might not have factored into your home buying budget, but are important to consider none the less:

  1. Moving costs. Whether you’re renting or selling the house you live in now, you’ll need to move your stuff to the new house. Hiring movers is a cost that needs to be included in your home buying budget so that you don’t get any nasty surprises when you get to this step. These expenses can be considerable, particularly if you are moving a distance, so it pays to organise this ahead of time and get quotes compared.
  2. Water, electricity and gas. You’ll need to either transfer or connect these at your new place and there are always connection fees associated with doing this. Make sure you give yourself plenty of time to get these sorted so that when you move into your new home, you’re already set up.
  3. Broadband and telephone. Similar to your utility connections, you’ll need to arrange for these to be set up ahead of time. There will be fees associated with transferring to your new home and in some instances, your provider may not be able to supply your new house, so other options have to be considered.

Before you head down the track of buying your next home, make sure you have a realistic budget set out and that you have accounted for as many of the costs as possible ahead of time. If you can allow for a 5-10% buffer as well, you’ll be well prepared to meet the associated costs.

If you need help with financing your new home, talk to us at Australian Credit and Finance. Our experienced team can find the right home loan for you and provide recommendations on many of the items outlined above. Call us today on 1300 735 557 or request a callback.

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