For many when they think of purchasing a new home, the deposit is what they focus on. It’s the biggest hurdle and largest upfront cost.
However, there are many other purchase-related costs that could total up to more. And many people don’t factor them into their savings plan. In some states these fees can add up to more than $55,000.
Below we have highlighted some of the most common additional costs. These will vary state by state and can be based on the property’s value.
The Farm Protectors are here to help. Please contact us if you have any questions regarding this article or the costs associated with purchasing a property.
Stamp duty is often the second highest cost associated with home ownership. It’s a tax paid to the state government and can vary on where you live, the value of the property purchased and if you are a first home buyer or not.
In Victoria a property valued at $500,000 can cost up to $21,970 in stamp duty.
When transferring the property title between the buyer and the seller, the state government charges a transfer fee. This fee varies based on your location and property value. In Victoria for a $500,000 property the transfer fee is approximately $1263 compared to New South Wales where the fee is only $136.
Mortgage Registration Fee
Another state government fee that varies from state to state. This fee is for registering the mortgage to a specific title. In both Victoria and New South Wales this will cost you $112.60 compared to $175 in Queensland.
Conveyancing is the legal work involved with purchasing a property. This including preparing the sales contract, preparing the mortgage documentation, title search and the legal transfer of the property title from the seller to the buyer. As a buyer you are able to complete your own legal work, however it’s strongly recommended to seek legal advice and get it done by a professional. Conveyancing fees vary on location, property value and the legal firm used. Some offer a fixed price while others vary based on the property price. The average cost of conveyancing in Victoria is between $900 – $2000.
Title insurance is insurance against the risks of property ownership that might affect your right to occupy and use your land. Some common examples include fraud against your title, unpaid rates or taxes or illegal building works.
The cost varies based on the value of the property and the insurance company you select. The good news is that it’s a once off payment for protection for the life of your property ownership.
According to First Title Australia, a $500,000 property in Victoria would cost $399.30 for title insurance.
When taking out a mortgage, banks generally will charge fees. These can include a loan establishment fee and a loan settlement fee. The fees can vary between banks and on occasion they can be waived or reduced based on loan types, special promotions, or your previous relationship with the bank. Budgeting approximately $800 should cover these fees.
Lenders Mortgage Insurance
If your deposit is less than 20% and you are borrowing the balance, you will be required to take out Lenders Mortgage Insurance (LMI). It can be almost as much as stamp duty, again depending on the property value. For a $500,000 property with a 10% deposit, your LMI per Gemworth’s online calculator could be up to $17,718.
If you have any questions about this article or would like assistance with purchasing a property, The Farm Protectors are here to help. Contact us today.