When purchasing a new home, it is important to note that your expenses will go beyond the purchase price of the property. You may already be aware of some of the upfront costs but there may be others that come as a surprise. Here is a list of the fees you have to take into account:
Lenders fees – When taking out a mortgage, you need to be aware of the lenders fees also, as these will be deducted from the loan funds available and could impact your budget. Speak to your mortgage broker prior to taking out a loan to ensure that you know what upfront fees your particular loan has.
Stamp duty – This is a State Government tax that may differ depending on the state or territory you are in. In Western Australia, it is calculated on the value of the property you are purchasing. There are Stamp Duty concessions for First Home Buyers, however, so check with your mortgage broker to see if you are eligible.
Government fees – Land transfer registration fees and mortgage registration fees should also be taken into account. Take a look at the fee structures that are applicable in your area. Government fees can include flat fees and other charges that differ depending on the price of the home.
Lender’s mortgage insurance (LMI) – This is charged by the lender typically when you borrow more than 80 per cent of the purchase price of the property. Keep in mind that this protects the lender, not the borrower, in case a home is sold for less than what the lender is owed should the bank have to take back possession of the property. This fee varies depending on the type of loan, deposit you have saved, and type and location of the property.
Legal fees – These include costs for conveyancing, or the transfer of the property from one person to another. Take note that these vary depending on the type and location of the property as well as your solicitor of choice.
Searches and inspections – These include details on the structure of the property, visual inspection on the condition of the home, repair recommendations (if any), reports on past and/or current pest infestation, report on the position of the home, as well as information on the property owner and legal rights to the property. Once you’ve put an offer on the home, the conveyancer should be able to inform you of these fees to ensure that everything is accounted for before buying the home. Completing these searches and inspections will give you some peace of mind when you make a purchase.
Moving costs – Don’t forget the expenses for moving your furniture and other things from your old home to the new one also. There are a lot of moving companies to choose from. Do your research and take note that it may be more costly if you will be covering a great distance.
Whilst we have compiled this list of the main costs associated with buying a home, this list is not all encompassing and there may be other charges specific to your circumstance. Make sure to talk to your mortgage broker, solicitor, conveyancer and settlement agent as well, who can guide you on the extra costs that may be involved. It is also recommended that you check the policies that are being implemented in your state or location in the coming months so you don’t be caught off guard when you purchase your home.