When buying a home, you must consider all the potential hidden costs, including stamp duty, processing & conveyancing costs, and registration fees.
Knowing all the costs involved can help you plan and develop a better budgeting strategy to save up. Here are 10 common home buying costs you need to know apart from your deposit.
1. Mortgage application fees
Mortgage application fees are processing fees you pay your bank to set up your loan. These include valuation fees, legal fees, and administrative fees. We highly recommend asking your bank to break down and itemise everything so that you know where your money is going.
All fees should be reflected in your loan contract, so we suggest going through the fine print to know how much you’re paying for the mortgage application.
You can also ask your bank about reduced-fee deals or loan packages with application fee discounts. Mortgage brokers, such as Mortgage Pros, can negotiate this on your behalf.
2. Mortgage registration fees
Mortgage registration fees are distinct from the previous cost. Instead of paying this directly to your bank, it is enforced by state and territory governments.
But note that mortgage registration fees are insignificant compared to other fees and costs in this list. Expect to pay roughly $115 to $200, depending on your state and location.
3. Stamp duty fees
Stamp duty, also called transfer duty, is another fee imposed by states and territories depending on the property purchase amount. In other words, the higher the property price is, the more you’ll have to pay for stamp duty.
How much you’ll pay in stamp duty depends on your location. Nevertheless, this is often the biggest upfront cost aside from your home loan deposit.
You may qualify for stamp duty concessions depending on your financial circumstances and the type of property you’re buying. Talk to our senior mortgage brokers at 1300 030 388 or enquire now to get a more accurate estimate.
We’ll also keep you informed on updates about state-based incentives and schemes so you know how much you can save by applying for one.
4. Legal and conveyancing fees
At several points throughout the home loan and home buying process, you will need a licensed conveyancer or solicitor to do the following tasks:
- Review your loan contract and advise on its clauses
- Perform meticulous checks on the title to ensure everything checks out and there are no anomalies or errors
- Facilitate a smooth transfer of the property from the previous seller
- Forward the stamp duty payment to your corresponding territory or state revenue office
- Draft the settlement documents of your home loan and home purchase
Your solicitor or conveyancer will be the one doing most of the paperwork. For this, expect to pay around $700 to $2,500, depending on the property and whether you have a conveyancer or solicitor.
Visit the Australian Institute of Conveyancers to learn more.
5. Lenders Mortgage Insurance (LMI) fees
If you’re taking up an 80% LVR home loan, you must put up a 20% deposit. Any LVR higher than 80% increases your risk as a borrower, so your bank will impose an LMI fee to cover this risk—unless you’re a professional and are eligible for 90% LVR or higher with an LMI waiver.
LMI fees often cost 1-3% of the loan amount and are a one-off fee. In many cases, LMI fees are already included in your loan amount.
6. Title transfer fees
State governments enforce title transfer fees to cover the cost of transferring the property title from the previous owner to your name. The amount will vary depending on the property location and state, so we recommend checking your local state/territory revenue office for more information.
If you don’t know where to start, call us at 1300 030 388 and we’ll let you know how we can help.
7. Property inspection fees
During the building inspection process, you’ll need to pay for a registered professional building inspector to uncover hidden issues and give advice on how much you need to spend to rectify structural and other property issues.
Property inspection fees typically cost around:
- $200 -$250 for small apartments up to 100 square metres
- $250-$350 for average-sized 3-bedroom houses in a regional area
- $400-$500 for 4-bedroom houses in a regional area
- $800-$1000 for houses with 5 or more bedrooms in a metropolitan area
8. Home contents and building insurance
The cost of premium insurance varies between states and territories, but we recommend saving around $500/year for home contents and $1000/year for building insurance.
9. Moving charges
You’ve settled the property purchase and are now ready to move! It’s time to consider moving charges, which could cost anywhere from $550 to $3,500 depending on location and how much you will move.
We recommend shopping around different companies and getting at least 3 quotes before deciding.
10. Connecting gas, electricity and telecommunications
If you’re purchasing an established property, there’s a good chance it already has utilities connected to it.
That means you should be cautious about reconnection fees. Try to kindly negotiate with the seller to keep the utilities connected so you don’t end up paying reconnection fees.
But if you are out of options and need to reconnect gas, electricity, and telecommunications, speak with different utility providers and see if they offer re-connection waivers or moving fees as an incentive.
Make sure that you comb through the fine print so no clause or hidden fees are left uncovered. At Mortgage Pros, we leave no stone unturned to ensure you are informed of all the fees, incentives, and benefits along the way.
Several government concessions can assist you in purchasing your first home, such as the First Home Owner Grant, which can help you with upfront costs. You may also qualify for the Australian Government’s Home Guarantee Scheme and skip LMI fees.
Learn more about the Home Guarantee Scheme by visiting Housing Australia. Kickstart your home loan application by discussing your best options with Mortgage Pros.