The Australian real estate industry is known for being very expensive to navigate, and saving up for a deposit is usually the hardest part. Most people assume that once you hand over that significant amount of money, you are done with the financial side of things. In reality, there are a number of other costs that will quickly rack up before you even receive the keys to the new home. It’s very important to understand these secondary costs if you hope to successfully navigate the banking system!
Legal and Professional Services
It’s obvious that you’re going to need professional assistance to purchase a home, and that assistance doesn’t come cheap. Conveyancers and solicitors are the ones who make sure everything goes smoothly in terms of the transfer of the home, and that all of the paperwork meets state regulations.
You’ll also need to arrange for building and pest inspections before you make an offer on a home. These inspections are essential in helping you avoid costly repairs in the future. These inspections can often uncover underlying issues such as termite damage that may not be immediately apparent during an open home.
Mortgage and Lending Fees
Your lender or bank will undoubtedly charge you a number of fees in order to set up your mortgage. This can include application fees, settlement fees, and property valuation fees. If your deposit is under twenty percent of the total purchase price, you’ll be required to purchase Lenders Mortgage Insurance. This insurance protects the lender in the event of default, not you.
State and Territory Stamp Duty
One of the most significant hidden costs is stamp duty. This is a tax levied by the state government and is calculated according to the price of purchase and the state or territory where one is buying. This is one area where homebuyers will notice a significant difference, as rates vary from state to state.
For instance, a homebuyer in Victoria will have to pay a much higher stamp duty compared to a homebuyer in Queensland. As a first homebuyer, it is essential to visit your state revenue office, as there may be a number of government concessions and exemptions that could greatly minimise this significant financial burden.
Ongoing Ownership Costs
The financial commitments, however, do not end there. There are a number of costs that homebuyers will have to contend with after signing the contract. For instance, there is the immediate council rates and water bills, which vary and are prorated.
If one is buying a unit, strata fees will be a necessary and recurring expenditure. This is a mandatory fee for apartment blocks and town houses, and it will be necessary to factor this into the budget. You will also have to purchase home and contents insurance from the day that you sign the contract, as well as setting aside funds for immediate repairs and possible renovations.
Securing Your Financial Safety Net
From home loans to personal loans, it’s important to choose a reliable partner like ING Bank to prevent financial mishaps. Create a comprehensive budget that will help you smoothly transition into homeownership. For instance, you will have to consult your bank and factor in these variables. Building a financial safety net will help one avoid any form of stress and allow you to enjoy your new home with peace of mind!
