Other than the actual price of the property you want to buy, there are a number of other costs you need to plan for. Here's a list of additional costs that you may need to consider in your budget.
Stamp Duty
There are two types of Stamp Duty you will need to budget for when purchasing your property.
The first, Transfer Duty, is a state government tax which is payable when a property is transferred. It is calculated on the purchase price of the property and is paid by the buyer. This Stamp Duty name and amount varies between states and territories.
The second, Mortgage Duty, is payable on your mortgage and is calculated on your loan amount.
Legal fees
You will also need to consider legal fees. When approaching a firm to do your conveyancing, it is important to understand how their fees are structured, and exactly what they cover.
Generally legal fees quoted will not include the searches that need to be done on a property before purchase. The basic searches can cost approximately $400-$500, and include:
- Contaminated Land Register Search
- Land Tax Search
- Title Search
- Council Rates Search
- Main Roads and Electricity Company Searches
Other searches may be required depending on the location of your property and the information you wish to know about the property. You should seek your own legal advice as to what searches are required and the costs of these searches.
Building and Pest Inspections
Many contracts on houses are signed subject to building and pest inspections. This gives you the opportunity to get the advice from a professional as to the condition of the property you're about to purchase. You should receive both a building and pest inspection report, outlining the current condition of the property, and any issues that you should be aware of. You should read this information carefully and question anything in the report you don’t understand to ensure that you still feel comfortable purchasing the home.
Property Valuation
Property valuations give you an independent view on how much the property is actually worth. The bank may require a valuation to be performed on the property, before it can approve your home loan application, but any valuation conducted by the Bank is for Bank purposes only and often is not provided to you. If you're unsure whether the asking price for a property is valid, a property valuation may give you the additional piece of mind you need. Just remember that this may be another cost for you to budget for when purchasing a home.
Lenders Mortgage Insurance
If you have less than 80% of the purchase price, you will need to pay mortgage insurance. Mortgage insurance protects the Bank against default of the loan. It is based upon the amount you are going to borrow.
Not all of the above costs may apply to your situation – however, they are costs that you should be aware may apply when purchasing a new property.
