Costs of Buying a Home: What to Think About Before You Buy

Stamp Duty, Fees & Taxes

Stamp duty is one of the biggest upfront expenses when buying a home, and it’s unavoidable. The exact amount depends on the state or territory in which you’re purchasing, but it’s charged by the government and can make a serious dent in your budget.

First-time buyers may be eligible for concessions or exemptions, depending on where they are buying. Make sure to check with your state’s Office of State Revenue for specific details.

In addition to stamp duty, you’ll need to pay registration fees, which cover the cost of lodging and registering the transfer of ownership with the state titles office.

Home Loan Costs

Fees

Most lenders charge various fees when arranging a home loan. This could include establishment fees, settlement fees, ongoing service fees, or even a fixed-rate lock fee. It’s important to ask your lender about these costs upfront to avoid surprises later.

Lender’s Mortgage Insurance (LMI)

Generally, if your loan exceeds 80% of the property’s value, you’ll need to pay Lender’s Mortgage Insurance. LMI can be expensive, and its cost depends on the loan amount and the loan-to-value ratio (LVR). The higher the risk for the lender, the higher the LMI. Be sure to compare quotes from multiple lenders, as LMI costs can vary significantly.

General Purchase Costs

Beyond stamp duty and loan fees, there are other general costs involved in buying a home:

• Legal Fees
  You’ll need a solicitor or conveyancer to handle the legal side of the purchase, including reviewing contracts, managing the transfer, and liaising with your lender. Ask for an estimate of their fees, as these can vary.

• Title Search
  Your legal representative will conduct a title search to ensure the seller has the legal right to sell the property and that there are no encumbrances like mortgages or easements that could affect your ownership.

• Pro-rata Utilities & Council Rates
  These are usually settled at the time of purchase, ensuring the seller has paid their share up to the settlement date.

• Inspection Reports
  Depending on the property, you may need to arrange building, pest, or strata reports. These help ensure the home is in good condition and free from major defects or infestations.

• Buyer’s Agent Fees
  If you’re working with a buyer’s agent, you’ll need to budget for their services. Buyer’s agents help you navigate the market and ensure you’re getting the right property at the right price. Future Habitat can guide you through this process and answer any questions about our services.

• Insurance
  Most mortgage providers will require you to have home and contents insurance in place before settlement. It’s a good idea to shop around for the best policy.

Ongoing Costs

Maintaining your home is an ongoing financial commitment. Here are a few costs to consider:

• Maintenance
  Regular maintenance, like cleaning gutters or tending to the garden, will help keep your property in top shape. Setting aside a maintenance budget can save you from expensive repairs down the track.

• Insurance
  Make sure your home and contents insurance is always up to date to protect against unexpected events.

• Council Rates & Utilities
  These are ongoing costs that are unavoidable, so it’s good to factor them into your monthly budget.

• Mortgage Payments
  Aim to pay more than the minimum repayment if possible. Even small extra payments can significantly reduce the length of your loan.

• Pest Control
  Regular pest inspections and treatments, particularly for termites, are crucial to protect the structure of your home.

• Emergency Fund
  It’s always wise to have a buffer for unforeseen events. From burst pipes to roof repairs, some things can’t be delayed, and it’s better to be prepared.

By planning for these additional costs, you’ll avoid any unpleasant surprises when buying your home. For more personalised advice, feel free to reach out to Future Habitat. We’re here to help make your home-buying journey smoother and less stressful.

Disclaimer: The content of this article is intended for informational purposes only and should not be considered financial or real estate advice. Readers are encouraged to consult with professionals for specific guidance tailored to their personal circumstances before making any property purchase decisions.