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First homebuyers: Costs you need to consider

28 May 2015 Glynde 0 Comment

You’ve worked hard, saved a deposit and now you’re ready to start seriously looking for your first home or investment property.

But have you considered how much money you’ll actually need beyond the purchase price?

The additional costs involved in buying a house can often add up to approximately 10% of the purchase price, so it’s important to do your sums before leaping into the property market.

Stamp duty, fees & taxes

First of all, you’ll need to pay stamp duty on the purchase price of your home. This is charged by the state or territory government, so the amount will vary depending on where you live, but it is typically one of the biggest hits to your hip pocket.

As well as stamp duty, you’ll need to pay a registration fee, which covers the cost of lodging and registering the transfer of land document with the state titles office. Again, the fee varies from state to state.

Home loan costs

Your lender may charge a range of fees for arranging your home loan, such as an establishment fee, a settlement fee, service fees and maybe even a fixed rate lock fee.

If you’re borrowing more than 80% of the purchase price, you may also need to pay Lender’s Mortgage Insurance (LMI). Depending on your loan size, this can be significant. For example, for loans over $250,000 with a loan to value ratio, this could amount to thousands of dollars.

General purchase costs

There are also a few other costs that go along with buying a new home, including (but not limited to):

Make sure you speak to your home loan specialist to get a full understanding of what’s involved. Most will be able to guide you through and make sure all the boxes are ticked.

Costs to get your home set up

You’ll be responsible for council rates, utilities and (for units and apartments) owner’s corporation fees as soon as you settle the property, and you should also consider taking out home and contents insurance. Don’t forget you need to pay for the removalist!

home set up- first home buy

Offsetting your costs

On the plus side, you may be able to offset some of these costs with various federal and state government incentives and rebates for first home buyers. However, make sure you check the rules and regulations, as each state differs.

Getting your rental bond back from your former landlord could be another nice little financial boost, just when you really need it!

There are quite a few extra costs associated with buying your first home. But if you do your research and draw up a detailed budget, you’ll be able to avoid any nasty surprises.




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