Tips for First Home Buyers – Hidden Costs

Quick Tip of the Week! When buying a home, there are some costs you expect and some you don’t.
Costs vary depending on the provider and the state you’re buying the property in.

Legal fees can cost anywhere from $1,500–$3,000 approximately, depending on the complexity of the structure.

Stamp duty – this varies from state to state. You can get an idea of how much stamp duty is by using online calculators.

Pest and building inspections can cost anywhere from $400-$600. In some cases the vendor may choose to pay for a pest and building prior to the property coming on the market but you may still choose to do your own. This is important for older houses especially.

Borrowing costs. There may be a range of fees imposed by your lender such as application, valuation and settlement fees. Make sure you ask your lender or broker about these fees.

Insurance. There are a few types of insurance you might be up for:

• Lenders Mortgage Insurance – if you have to borrow more than 80% of the purchase price of the property, you’ll need to pay Lenders Mortgage Insurance (LMI). This type of insurance protects the lender if you default on the loan. The amount depends on the sum you borrow and the value of your home.
• Building insurance – if you’re not buying a strata property your lender will probably ask you to take out building insurance dated from the time of exchange.
• Mortgage Protection Insurance – this is not necessary but can be handy. It covers your mortgage repayments if you get hit by illness or injury.

Other things to think about:

• Moving costs – unless you have some really good friends with a truck you’ll need to pay for removalists and possibly storage.
• Council rates and strata fees – the seller is responsible for rates up to and until the day of settlement but you’re responsible from the day after settlement.