hidden costs of buying a home

Breaking down hidden costs of buying a home in Australia

Imagine that you have found the perfect home that fits into your budget, you’ve got the pre-approval, and you have saved exactly the total amount needed for the deposit. But even before signing the contract, you find out there are many hidden fees that go along with the new house, and you have no extra money to pay them. Welcome to the joys of buying a home in Australia. 

If you are buying your first home in Australia, it is essential to be aware of all the other costs involved in this process. They might seem secondary, but if you don’t take it into account and prepare yourself financially for that, you might end up paying thousands of unexpected extra dollars. Let’s talk about the extra costs involved in buying a home, so you can plan ahead and get prepared to avoid surprises.

Hidden costs of buying a home in Australia

There’s no denying that buying a home in Australia is one of the most expensive but rewarding experiences in life. But before you can pop the champagne and host your first house-warming party, there are a few expenses that need to be taken care of. Let’s explore some of them below. 

Inspections

Here at Capta Financial, we always recommend hiring a professional building and pest inspection before deciding to buy the house to avoid future surprises. We aren’t your standard mortgage broker and want to ensure our customers have a seamless house-buying experience, especially if it’s your first time owning a property. 

In a professional building and pest inspection, you will have a professional checking all accessible and available areas of that property to make sure there is no visual sign of pests or termites that may affect the structure of the house or part of it. 

These inspectors examine the foundation, roof, walls, interiors, exteriors and smaller areas like attics and crawl spaces. They’ll also identify issues such as structural damage, water leaks and faulty wiring to determine the presence of pests like termites or rodents.

While in the construction inspection, the professionals will check if the property was built according to the building plans and respect all requirements, standards, and regulations.

Following the professional building and pest inspection, inspectors provide a detailed report with findings and recommendations. Buyers can then use this information to negotiate repairs with sellers or factor necessary fixes into their decision-making process, ensuring a well-informed property purchase.

Both inspections are very important in the process of buying a home, but they might not be cheap depending on the size of the house you are buying and the city you live in, so get prepared for that. While prices can vary among service providers, the average professional building and pest inspection can range from $400 – $500. 

Legal Costs 

When you buy a home in Australia, we also recommend hiring a conveyancer to help you with the legal process. Buying a home is filled with legal jargon and paperwork, and a conveyancer can simplify the process and alleviate stress. This professional specialises in property transfers, which means they can make the legal process much smoother and save you a lot of time and stress.

A conveyancer will help you review the sale contract, conduct title searches and strata reports on your behalf, prepare the documents needed for the real estate transaction and arrange settlement details.

The professional team at Capta Financial have partnered with some of the best in the business and can put you in touch with an experienced and competent conveyancer who can take care of your upcoming property purchase. 

Conveyancing fees will vary depending on your needs, but just to give you an overview, the process might cost anywhere between $1,000 and $2,000. 

Stamp duty (if applicable)

One of the more taxing steps in buying a home is Stamp Duty. This is a tax charged by the government to transfer the ownership of a property to someone else.

Some states, such as NSW, VIC and QLD, offer first home buyers Stamp Duty concessions that allow buyers to access up to a full tax concession, depending on the property’s price. Please talk to us, and we can help you check if you would qualify for that.

If this is your case, great! Stamp Duty might not represent a very high hidden cost for you then. However, if you are not eligible for the concession or can get only a partial discount, we recommend including that in your budget.

Just to give you an idea: for an owner-occupied property worth $600,000 – if we do not consider any other Government Grant – the Stamp Duty would be something around:

NSW: $22,207

QLD: $12,850

VIC: $31,070

SA: $26,830

Buyer’s agent fees

You might want to get help from a buyer’s agent to find the right property, which is totally recommended, but you have to get prepared to pay their fees. 

The buyer’s agent fee will vary depending on the agent, but they usually charge an engagement fee in advance and a percentage of the property when it is sold. This percentage also depends on the property price, so we recommend that you check all terms and conditions before closing the deal. 

Moving costs

Ok, you’ve bought the house, all pre-settlement and legal costs have been covered, so it’s time to move in and relax, right? 

Hum, not yet! There are other hidden costs of buying a home!

Don’t forget the moving costs: you may decide to hire a professional cleaning service to remove post-construction dust from floors and walls, for example. Or, you will need a removal service to help you with the hard work. 

Taking that into account and planning your budget ahead is crucial. 

Council rates

Each council collects rates from properties in the area to fund infrastructure and services. Fees are paid annually, and the amount varies from council to council, state to state and property to property. 

We recommend you to check your council’s website to understand how rates are calculated and how much are the fees.

Strata fees

If you are buying an apartment or a home in a large building complex, you might include the Strata fees on your spreadsheet. 

The amount to be paid by owners is decided by each Committee and varies depending on the complex’s size, facilities offered, and total expenses.

Mortgage Insurance

This is one of the hidden costs of buying a home most people ignore. It is important to remember that when paying a deposit lower than 20%, chances are your lender will require you to pay the LMI (lenders mortgage insurance) to minimize the risk of lending money to someone with little savings.

This fee varies according to the property’s price and how much deposit you are putting down. Check out this other post to figure out how much deposit you need to buy a house in Australia, be it a brand new home for your family or an investment property.

Ready to buy a home? Partner with Capta Financial today.

Take your first step toward achieving the Great Australian Dream with Capta Financial. We are respected mortgage brokers who will work alongside you to source the most competitive home loan and point you in the right direction for property success. Contact us today to get started.

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