If you’re a prospective home buyer, you’re probably focused on the main cost involved – the price of the home itself. But did you know that there are hidden expenses related to buying a property? Here are some common costs to factor into your budget.
Conveyancing and solicitor fees
A conveyancer or solicitor takes care of the legal paperwork involved in buying a home. This includes reviewing a contract, carrying out land searches, and lodging documents. Their fees can range from $1000 to $2000.
Stamp duty is a tax charged by state and territory governments on a property transaction. The cost depends on factors such as location, price, and if you’re buying as an investor or owner-occupier. First home buyers may receive a stamp duty concession depending on the state and territory they buy in.
Pest and building inspections
Pest and building inspections are optional but recommended so that you can have peace of mind that your new property has no underlying issues. A combined pest and building inspection can range from $300 for a small home to $1000 for a large home in metropolitan areas.
Hiring a removalist can be quite an expense, with the average hourly charge sitting at around $70 per half hour. Depending on how much assistance you need with the move, this can certainly add up to be quite expensive.
Establishing NBN at your new home is a moving essential, and costs around $300 to set up a connection. Although this is an extra expense, it is best to organise it in advance so that you can stay connected once you’ve moved in!
Loan application or establishment fees
Lenders charge a one-off fee for setting up a home loan. Application fees vary according to lenders, your mortgage product, and loan amount. Some lenders may waive the fee under special circumstances such as a promotion.
Lenders Mortgage Insurance
If you’re borrowing more than 20% of a purchase price for a property, a lender will charge you Lenders Mortgage Insurance (LMI). LMI protects the lender from financial loss if a borrower can’t meet their home loan repayments. The amount charged depends on factors such as your deposit, your home loan amount, and whether the property is an investment or owner-occupied. You can avoid paying LMI by saving a bigger deposit.
While you may agree to a purchase price with a seller, a lender will still carry out a valuation of a property before giving you unconditional approval. They will use this valuation to assess whether or not they’ll lend to you. A valuation can cost between $300 and $600, but some lenders may not charge for it.
If you need help understanding the various costs involved in buying a home, book an appointment with one of our Borro brokers today or call the team on 1300 1BORRO.