Aside from the deposit you will need to purchase your property, you need to consider several extra costs associated, ranging from bank fees, solicitors’ fees, search fees, pest and building inspection , stamp duties, insurance, body corporate report and adjustment to rates and water charges. You will need to have money to cover all of these costs, as part of your purchase, as they will occur as part of the purchasing phase.
TIP Knowing all the additional costs linked to the purchase of a new home is important, to prevent additional borrowing from your lender. The sooner you have a fix on how much extra you will need, the sooner you can start saving for it.
The list that follows gives you some examples of added costs you can expect and where possible we have provided an estimated of the cost.
Bank Fees – includes application fees, registration fees and other fees that are associated with obtaining your loan. These vary by individual lender.
Solicitors Fees – It’s a good idea to engage a solicitor to handle your purchase and transfer of title. The role of the solicitor in purchasing a property is important and should not be underestimated. The solicitor, or conveyancer as they are commonly referred to, will advise you on what searches to do and will guide you through the legal process of changing the property into your name. In Queensland, you purchase as ‘Buyer Beware’, which means that once the property settles any issues, problems or outstanding money owed on the property, also transfer to you as the new owner. Clearly this can haunt you when it goes wrong so don’t take the risk. TIP Don’t leave anything to chance, hire a good solicitor and make sure you are protected. Do searches as recommended by your solicitor and satisfy yourself of what you are buying. Saving $100 on one of the largest transactions you will do, is not as important as getting right. Allow approximately $900 to $1,200
Searches – Generally these are conducted by your solicitor. Searches are necessary to identify if the seller of the property really is the owner. Searches also serve to establish if there are any unpaid rates or water on the property. Depending on the property you purchase, searches also can provide confirmation that renovations have been certified and relevant information on easements. The costs of searches can vary considerably, allow approximately $1,000
Council and Water Rates – Generally, the existing owner of the property pays for water and rates in advance. Once settlement is arranged, your Lawyer will calculate the amount that is owed by you to compensate the seller for any payments beyond your purchase date. Alternatively, in the advent that the seller has unpaid rates or water owing, your Lawyer will adjust the price to deduct these outstanding payments from the purchase price.
Lender Application Fees – Most lenders will charge a fee for processing your loan application which is non-refundable. Depending on the situation, these fees can be incorporated into the loan. It is prudent to discuss possible fees with your Mortgage Broker in the advent that they cannot be incorporated into the loan.
Pest and Building – Having a professional do a building and pest inspection is always a sensible thing to do. A specialist will produce reports that will identify, and damage associated with termites or problems with any form of vermin. You will also receive a building report identifying any problems or damage with the property. Depending on the wording of your contract, you will have the option to continue or abort your purchase once you review the results of these reports.
Transfer Duty or Stamp Duty – also referred to as land transfer as it refers to a one-off payment for the transfer of the land you are purchasing from the seller to the buyer. There is no way of avoiding stamp duties, but there are concessions available to first home buyers.
Transfer duty is calculated based on the purchase price. The higher the purchase price, the higher the amount of transfer duties. Your solicitor will inform you of how much you will require.
Body Corporate Report Fees – This is only applicable to properties that are part of a body corporate like apartments, town houses etc. You will receive a report from the body corporate which outlines the financial status of the body corporate and other important factors associated with the body corporate. Cost varies by complex.
Home Insurance – Once your contract is signed, you will need to immediately setup insurance cover for the new property as you are liable for any damage or loss, even though the property is still owned by the seller until settlement