The unknown cost of purchasing a new home


A properties price tag isn’t the only thing you’re spending when buying a new home. All buyers should be aware of the extra hidden costs.

Do you think you have enough money to buy that property?

The Unrevealed Costs of Purchasing

Purchasing a home isn’t as easy as saving up a deposit & waiting to hear if your offer has been accepted or not, believe it or not that’s actually the easy part.

The difficult part is checking to make sure you have enough money for all of the hidden costs that appear. Keep in mind that the deposit you have already saved is just one part of the cost of buying.

You actually may have already spent a generous amount of your money, once you add the costs up of stamp duty & Lenders Mortgage Insurance.

Here at Barr and Standley, we have supplied a list of fees & costs you should familiarise yourself with before signing on the dotted line, to ensure you are well prepared when the bills show up.

A Property Buying Scenario to Contemplate

When purchasing a home, what are the costs?

Lets assume the following:

  • Property is worth $300,000
  • Owner-occupied (being that you live in it for the first year)
  • Mortgage rate of 5%
  • Deposit: 10% ($30,000)

Here are some estimated costs based on this information.

Depending on the provider & the state you are purchasing the property in, the costs may vary.

Legal Fees: Approximately $1,500 – $3,000 (depending on the intricacy of the structure)

If you’re buying through a company or trust ownership for example, in the end you could be paying a lot more. An ownership structure that is simple and straight-forward, will be at a lower cost.

Stamp Duty: Varying from state to state, you can get an idea of how much stamp duty you have to pay by using online calculators.

Basing it on the example above, the estimated stamp duty is around $17,990.

Building & Pest Inspection: $300 – $400

You will need to get this done, more so if you are purchasing a pre-owned property. Newer properties may also have defects that only a trained professional can detect.

Establishment Fee or Loan Application: $600

This one-off cost is charged by the bank when applying for a loan. Sometimes (not always) banks may renounce this fee if you’re taking a package loan.

Lenders Mortgage Insurance: $7920

You pay the premium lenders mortgage insurance to cover the lender for supplying you more than 80% of the expense of the property.

To prevent paying this, you will need to save a larger deposit amount.

Depending on the insurer, the final amount will differ but ultimately this is a good indication of how much you should be budgeting for.

Legal Charges/Document Preparation Fee: $200 – $300

Before your contract is approved, your lender may charge a fee to prepare your home loan documents.

Bank Valuation fee: $300 – $400

When arranging an independent valuer to appraise the property you’re planning to purchase, the bank may charge you a fee. Some banks include it,

but some may waive it from the final cost.

Title Insurance: $360

This insurance protects you from any claims against the title of your property.

Registration of Title: $75

The cost of registering the title of your property with your state government.

Council & Water Rates: $500 – $700

You are required to pay the vender the remaining annual or periodical rates when you purchase a property, such as water & land. These will commence from the date of settlement & will be sole to the area and property.

Legal Searches & Enquiries: $285

To ensure there are no obstructions on the property, a number of searches are required.

Estimated Cost: $11,540 – $14,050

Plus Deposit: $30,000

Total Estimated Cost of Buying: $41,540 – $44,050

So as you can see, there are far more hidden costs then one would anticipate. Make sure you plan these costs into your budget before searching for you perfect home.

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