The true cost of buying a home goes well beyond the purchase price. Take a look at our top home-buying costs with tips on ways to save.
The price of your home:
This is important—the listed price of a property is not set in cement, and some hard bargaining can see you save thousands of dollars. As a general rule, try knocking 10% off the listed price—maybe more if the property has been on the market for a while. Bear in mind, lenders generally want to see a deposit of at least 5%, so don’t commit to a property you cannot afford. TIP: Try to avoid giving the impression you love the place. It’s a lot harder to haggle for a discount if the agent can see you’re completely hooked on the property.
Stamp duty is levied by all state/territory governments so it’s as unavoidable as cheap perfume from grandma on your birthday. But there are ways to trim the tab. As duty is based on the price paid for a property, buying vacant land first and building later can mean paying less duty than if you purchase an established home. Either way, the more you can negotiate on price, the more you’ll save on stamp duty. TIP: Use our stamp duty calculator to know how much your stamp duty will cost.
Conveyancing covers everything from reviewing the contract of sale through to transferring your new home into your name. It’s a job that can be done by a solicitor. Budget for around $1500 though fees vary widely so shop around. TIP: Line up a solicitor before you start home hunting. That way you can act quickly (and maybe cheaply) when you find the right property.
Building & Pest inspection:
A pest/building inspection is essential as it will reveal structural faults, dodgy building work or pest problems the vendor may be trying hide. Allow around $600 for a combined report. TIP: A poor pest/building report can be useful in price negotiations—be sure you can afford any repairs once the place is yours.
If you’re buying an apartment, villa or townhouse, a strata report (cost: around $400) will show if any major building work is on the agenda—an expense the owners will have to cover.
Home loan application fees can range from $0 through to over $1,2700, so it pays to compare between lenders. Watch out for ongoing account-keeping fees too. They quickly stack up.
Lenders Mortgage Insurance (LMI)
LMI applies if you borrow 80 per cent or more of your home’s value. LMI protects the lender, not you, and that makes it a cost worth minimising. The easiest way to do this is by saving the largest deposit possible. TIP: You may be able to add LMI to the loan rather than paying it upfront. This means paying interest on the premium, which bumps up the cost.
Home building insurance:
As soon as you pay a deposit you have a financial interest in a property. At that point you need to take out home building insurance.
TIP: Save on premiums by arranging cover online via our insurance offer.
Connection fees for power and/or gas can be around $100. Allow more if you’re adding internet and pay TV.
Moving costs can range from a case of XXXX Gold and a barbecue for a few mates with a ute through to a several thousand dollars for a full-service removalist. Work out what’s affordable for you. TIP: Take out home contents cover as soon as you’ve settled into your new home.
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