With the property market on the Gold Coast and in Brisbane really starting to take off and interest rates continuing to remain so low, now is the perfect time for a first homebuyer to enter the market. Many first homebuyers however are probably unaware of the associated costs of purchasing a property.
The price you pay for the property is not the total cost that you will be up for. There's conveyancing fees, stamp duty, mortgage fees and adjustments to consider, which can easily add up.
We found this great article below, which provides a good explanation of the costs that a first homebuyer may encounter.
Buying Your First Home - Costs to Consider:
You’ve worked hard, saved a deposit, spoken to your home loan specialist or bank about approval and now you’re ready to put an offer on your first home or investment property.
But have you considered how much money you’ll actually need beyond the purchase price?
The additional costs involved in buying a house can often add up to approximately 10% of the purchase price, so it’s important to do your sums before leaping into the property market.
“You need to consider more than just the property’s purchase price.”
Transfer duty, fees & taxes:
First of all, you’ll need to pay transfer duty, or stamp duty, on the purchase price of your home, as well as on your mortgage documents. This is charged by the state or territory government, so the amount will vary depending on where you live, but it is typically the biggest hit to your hip pocket.
As well as transfer duty, you’ll need to pay a registration fee, which covers the cost of lodging and registering the Transfer of Land document with the State Titles Office. Again, the fee varies from state to state.
Home loan costs:
Your lender may charge a range of fees for arranging your home loan, such as an establishment fee, a settlement fee, service fees and maybe even a fixed rate lock fee.
If you’re borrowing more than 80% of the purchase price, you may also need to pay Lender’s Mortgage Insurance (LMI). This often costs several thousand dollars.
General purchase costs:
There are also a few other costs that go along with buying a new home, including (but not limited to):
- Legal fees: Your solicitor or conveyancer will organise the legalities of transferring the property from one person or another. Ask your solicitor or conveyancer for an estimate of fees.
- Title search: This is performed by your legal representative. It makes sure that the seller is able to sell the property and whether there are any encumbrances on the property.
- Inspection reports: These may include building, structural and pest inspections.
Make sure you speak to your home loan specialist to get a full understanding of what’s involved. Most will be able to guide you through and make sure all the boxes are ticked.
Costs to get your home set up:
You’ll be responsible for council rates, utilities and (for units and apartments) owner’s corporation fees as soon as you settle the property, and you should also consider taking out house and contents insurance. Don’t forget you need to pay for the removalist!
Offsetting your costs:
On the plus side, you may be able to offset some of these costs with various federal and state government incentives and rebates for first home buyers. However, make sure you check the rules and regulations, as each state differs.
Getting your rental bond back from your former landlord could be another nice little financial boost, just when you really need it!
There are quite a few extra costs associated with buying your first home. But if you do your research and draw up a detailed budget, you’ll be able to avoid any nasty surprises.