You know all about the cost of buying your first home. You’ve saved a great deposit and signed on for your first mortgage. All that’s left to do is move in, right? You’ve already put your new address into your food delivery app. But what’s this? More things to pay?
Don’t let the hidden costs take you by surprise. Budget for these seven items ahead of time and move into your new digs with enough left over for the housewarming party.
1. Loan application fees
A great loan isn’t just about the rate you’ll be paying. When making comparisons, make sure you check for any fees associated with applying for and setting up your home loan. These application fees can add several hundred dollars to your costs.
Bear in mind too, if you borrow more than 80% of the value of your home, you’ll need to budget for the cost of lenders mortgage insurance. This exact amount will depend on how much you borrow – your broker can provide details for your circumstances.
2. Housing stamp duty
The cost of buying a house isn’t just what’s on the huge cheque. Stamp duty is a separate cost based on how much you’re paying for your property. It’s like a state government tax on your property purchase. How much you’ll be up for varies according to where your first home is located and its market value.
As a first-home buyer, you may be entitled to concessions on stamp duty. Again, this is something your broker can discuss with you.
3. Bringing in the lawyers
It won’t surprise you to hear that buying a house means lots of legal stuff. Besides the bank paperwork, you’ll also need a solicitor or conveyancer to handle the legal aspects of transferring ownership.
Unless you’re a legal eagle or binged The Good Wife, you’re going to want to get someone else in to manage this process.
Unlike attaching doorknobs and doing your own winged eyeliner, it’s definitely not a DIY job. Ask friends or family for a service they recommend and be prepared to shop around and compare conveyancer fees.
4. Building insurance
Your financial interest in your property starts as soon as you exchange contracts. That means you don’t even need to move in before you’re potentially liable for any damage to it or injury it might cause. Unlike the idea of your home throwing rakes at strangers, your obligation is serious.
To avoid bigger, life-changing costs, take out building insurance as soon as the contract is finalised. Premiums vary widely so it pays to shop around. Once you move in to your first home it’s sensible to add contents cover to the mix.
5 . Rates and strata fees
Unlike renting, where you pay a landlord a fixed amount to live in their property, a house you own has extra living costs. Your local council will charge rates that go towards things like local amenities, roads, parks and biscuits at council meetings. If your new place is one of many, like an apartment or unit, you’ll likely also pay strata levies. That’s a periodic payment towards communal needs like cleaning, gardening and building maintenance.
Take a look through the contract of sale to find out what you’ll be up for in quarterly council rates or strata levies. A portion of these costs may also be payable when you settle on the property, so it’s worth checking to find out what’s due when.
6. Moving costs
Here’s a fact: moving always takes more time and effort than you think. Every trinket you’ve ever owned needs to be put in a box. All your plates, books, toiletries, decorative cushions and the stuff in your fridge. Getting some help will make things much easier.
Moving costs can range from the price of a case of beer for your strongest mates right through to several thousand dollars for professional removalists. It makes sense to check out a range of options, and remember, you don’t have to take expired Vegemite to your new place. Just pop it in the bin. Done.
7. Repairs or renovations
Organising a pre-purchase pest/building inspection will tell you upfront if a property has issues like dodgy wiring, illegal renovations, structural problems or an infestation of adorable but devastating bugs eating the plasterboard. These issues don’t necessarily mean you have to walk away, but you should factor in any repairs that need to be done before you move in.
If you have renovations in mind, check out any council requirements and speak with a reputable builder to come up with an accurate cost.
Buying your first home is probably one of the biggest, scariest and most exciting purchases you’ll make in your lifetime. Factoring in the other costs when buying will help you to move in on budget and without any nasty shocks to your bank balance.
I can provide clear answers about how much your first home loan will really cost. If you want to find out more, give me a call on 0413 437 389.