Buying your first home is a landmark in your life and it’s a truly exciting times. However, it’s also likely to be one of the biggest financial commitments you’ll ever make, so it pays to know the costs.
Sadly, these aren’t always apparent and stem much further than just the price of the property you’re interested in. in fact, knowing the full sum you’ll need to pay to secure your dream first home can be the difference between you getting your hands on those keys and missing out entirely. Read on to find out more.
Some lenders will accept a deposit as low as 5%, but typically these range anywhere from 10-20% of the home’s value, depending on the type of loan you opt for.
To work out how much of a deposit you’ll need to put down, think about the average property price in the area you’re looking at, the type of loan you’re after, and how much you’re hoping to borrow.
This one is often overlooked, but it can put a significant sum on the amount you need to front up for a property. Stamp duty is added onto a residential property sale by the state government and it’s probably going to be one of the biggest hurdles to you buying your first home.
The sum you’ll have to pay is totally dependent on where you’re going to be living, but check with your local authorities, as first-time buyers are sometimes entitled to state-led concessions of up to $10,000.
Lenders Mortgage Insurance
If you’re hoping to borrow over 80% of your target property’s value, then you’ll usually be hit with an additional charge for Lenders Mortgage Insurance (LMI). This gives lenders security in case you default on repayments for your property.
If you want to avoid this additional cost, you should ensure you’ve got your savings in order before committing to a purchase.
As mentioned, this is likely going to be one of the biggest financial commitments of your life, so it makes sense to protect it. Your lender is likely to make building insurance compulsory, but you should also look into other insurance policies, such as mortgage protection insurance, to protect you financially if you’re unable to meet your monthly repayments. Income protection insurance will also serve to protect you if you fall seriously ill or are injured and no longer able to work.
Costs of Legal Assistance
On the back-end, property buying is a heavily-legal process, meaning you’ll need the help of lawyers, conveyancers and solicitors to ensure a smooth transition. This does mean, however, that you’ll need to factor in the costs of their services into your budget. Some conveyancers charge a standalone, flat fee, whereas others will charge a percentage of the property price.
Pests and Building Tests
These are usually required by the lender, as they want to make sure their investment is structurally sound. However, even if they’re not essential, they’re definitely worth pursuing.
If you’re thinking about buying an apartment or unit, you should also have a strata inspection carried out, which will give you a report of the financial position and liabilities of the complex. In addition to pest inspections, strata tests can help you avoid buying a property that’s doomed to market failure.
Council Taxes, Rates and Strata Fees
Once you buy a property, you become immediately responsible for all of the attached strata fees. Although both house and unit owners need to pay council rates, only unit or apartment owners are obliged to pay strata fees.
These cover the maintenance and building insurance costs incurred by the building owners. These will be paid either monthly, quarterly or yearly, so you need to factor these into your budget.
How much you’ll have to pay for strata fees tends to vary based on the age of the building, the facilities, and its location, but you should expect to pay around $80 to lodge an application.
The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.