You’ve been following the market, looking at mortgage calculators, and you’ve got your eye on a house you’d like to make your home.
The problem is, you’ve been fixated on the cost of the house. You know how many hundred thousand you’re willing to pay for it, but you may be unaware of some of the additional costs associated with buying.
Here are a few extra costs you should be aware of through the process.
Stamp Duty is a property tax transaction cost when buying a new property. In Australia, stamp duty is payable to the relevant state or territory and is calculated against factors such as the purchase price of your property, location, and loan purpose.
Stamp Duty is to be paid within 30 days of settlement and is one of the biggest up-front costs of purchasing a property. For example, if you were buying a home for $400k in NSW, the Stamp Duty could be a little over $13k depending on the circumstance. The higher the property purchase price the greater the percentage of stamp duty you will have to pay.
The good news for first home buyers is that depending on your state and the value of the property, you may be exempt from paying Stamp Duty. Lucky you.
Depending in the lender, without a deposit of 20% it’s likely you will need to take out mortgage insurance. As with other insurance, Lenders Mortgage Insurance will depend on the size of the loan and your deposit, and other personal factors.
Mortgage insurance can be several thousand dollars, depending on your circumstances. As there are other options such as guarantors or saving a larger deposit, it’s important to seek sound financial advice.
There are additional smaller costs you may incur when purchasing your home. Mortgage registration fees, transfer duty and a loan application fee may set you back a few hundred dollars as well as any conveyancing fees for those looking for legal assistance throughout the process. Depending on the time that you settle, you will need to pay any strata or council rates as adjusted according to the settlement date.
Buying a home can be both exciting and stressful, and whilst you may be fixated on the market price of your dream home, it’s important to be aware of all the additional costs associated with the process and budget accordingly.
Disclaimer: The ideas, discussions, options and details expressed in SCCU Blogs are for general informational purposes only and are not intended to provide specific personal advice or recommendations for any individual or on any specific security or investment product. We intended only to provide education about the financial and banking industry to make the complex simple, and help everyday customers realise their dreams.