Imagine, you’ve found your first home, love the area and it fits in your budget. But the agreed purchase price is just the beginning. You must cover a number of other costs, and failure to take these extras into account could take the gloss off this exciting time. Here’s what you need top know as first homebuyers!
It’s important to identify and estimate all the associated costs so you work out the absolute maximum amount you can offer on your dream home.
The following list will get you started.
Costs that First Homebuyers need to factor in
Borrowing costs
In addition to interest, lenders may charge a range of fees. These include:
- Loan application or establishment fee.
- Document preparation fee.
- Bank valuation fee.
- Title insurance.
- Registration of title.
- Lenders mortgage insurance, if your deposit is less than 20% of the property value.
Some of these fees may be waived and with a bit of negotiation you may be able to drive a good bargain.
Legal fees
It’s best to get expert help with transferring legal title of the property. This is a competitive area so get quotes from reputable legal or specialist conveyancing firms.
Stamp duty
Stamp duty is usually the biggest extra and varies widely between states. Aside from the value of the property, the level of stamp duty may also depend on whether you are first homebuyers and if it is a primary residence or investment property.
State and territory government revenue offices provide online calculators, and a real estate agent should be able to refer you to duties payable for different property values and usages.
Transfer fee
This also varies from state to state, anything from a few hundred to a few thousand dollars.
Building and pest inspection
This is a relatively small investment that could potentially save thousands of dollars in the long run. Make sure you organise your own inspection using an independent service; don’t rely on a report provided by the vendor or real estate agent.
Council and water rates
You must reimburse the vendor for their unused portion of prepaid council and water rates that apply at the date of settlement. The amount will depend on the property value and the length of time to the end of the current rates period.
Running costs
Ongoing running costs include council rates, repairs and insurances, and maybe body corporate fees. Factoring these in from the beginning will help you better manage your mortgage repayments.
Homework pays
If ever there was a case for ‘buyer beware’ it’s when buying a property. Do your homework to uncover these hidden costs so you can work out exactly what you can afford to pay when it’s time to make an offer, and get advice when needed. Then you can break open the bubbly and celebrate!
Conclusion
Buying your first home is a thrilling milestone, but knowing all the associated costs upfront can make the journey smoother and more enjoyable. By taking the time to understand each cost—from loan fees and stamp duty to inspections and ongoing expenses—you’re setting yourself up for success. Remember, preparation is your best ally in the home-buying process. With a clear budget and a thorough grasp of these extra expenses, you can move forward confidently, knowing exactly what you can afford. Then, when the keys are finally in your hand, you’ll be ready to enjoy every moment of life in your new home. Here’s to a bright future and a place to truly call your own!
