Got preapproved finance? Check. Enough income to cover the bills? Check. But do you really know how much it costs to secure that new home?
Some expenses, while commonly overlooked, are essential to consider when you’re stepping into the property market for the first time.
Building, pest and land inspections can be essential, depending on the type of property you want to buy and your reason for buying it. Although there is a fee, you could inevitably save thousands in potential repair costs.
You can try to cut these costs by simply asking the vendor for any reports they may have. They are not always attached to the contract provided by the agent, so sometimes it’s best to just ask.
Legal fees and disbursements
As a rule of thumb, conveyancers often charge a flat service fee, while solicitors generally charge by the hour. So if your property purchase is relatively straightforward (that is, there are no property rights in conflict or unwanted covenants burdening the property), then you could probably save money by simply going with a conveyancer. But as always, shop around to get the best value.
Council rates and strata fees
Although a house or apartment might appear ‘cheap’, its upkeep may end up costing you in the long run. Ask the vendor for a copy of the council rates notice or strata report to understand your expected outlay every quarter. And when it comes to strata, check that the sinking fund isn’t running dry – you don’t want to be called upon at the next owner’s corporation meeting to pay more in strata fees than you expected.
Although in some states concessions and grants are currently available for eligible first home buyers of new homes, be mindful that stamp duty can be quite a hefty chunk of your purchasing budget. Luckily, there are online calculators to help you determine how much stamp duty you will be liable to pay.
Home, contents, landlords … They are all worth considering before buying a property. To protect your investment, you want to take out insurance sooner rather than later, making sure your property is covered from the day you exchange contracts.
If you’re buying a fixer-upper, be sure to factor in the cost of carrying out renovations. Then double it. Renovations – even the best-planned ones – can spiral a budget out of control pretty quickly!
Mortgage establishment fees, interest and penalties
Consider up-front mortgage-setup fees and talk with your financial provider about securing the best deal. Are they able to waive the establishment fee for a long-term or new customer? It doesn’t hurt to ask and shop around.
A savvy budgeting plan addresses all of these potentially hidden costs so that your first-time purchase goes smoothly.