Unforeseen Expenses to Include in Your Home Buying Budget

Budget for more than the sale price when purchasing your first home. First-time home buyers often fall victim to overlooking essential costs like pest inspections and stamp duty fees that they need to consider in their planning.

Unwitting buyers could be in for an unpleasant shock when it comes time to finalizing the price of their new home, with additional fees possibly increasing the total by as much as $50,000. Once all fees, mortgage costs, real estate fees, sale fees and taxes have been considered together the total can increase considerably.

As part of our effort to help you prepare, we spoke with William Kiln from ING Mortgages about some of the hidden costs of home buying.

Conveyancing and Legal Real estate can be a minefield of legal jargon and paperwork, so having an expert help guide the conveyancing and legal processes will save you both time and trouble later on.

William advises shopping around to find the best value.

Prior to formalising an offer on any property, it’s wise to have several professionals assess it for any pest or building defects that might cost more in the long run, like insects or structural flaws. This way, any issues like termites will be brought to light early enough and resolved prior to you making an offer.

All told, this could cost around $500.

“When shopping around for lenders, don’t simply consider interest rates alone; also pay attention to any associated fees such as an application fee,” advises Kiln. Don’t be afraid to question them further and negotiate better offers if necessary.”

Lenders charge an application or establishment fee to cover the administrative costs associated with processing your application.

Kiln states that lender-specific fees could range anywhere from $200 to $1000.

Stamp Duty
Stamp duty is a tax payable to state governments upon purchasing real estate, calculated as a percentage of its sale price. First-time home buyers may be exempt or eligible for concessionary rates through incentive schemes that reduce stamp duty payments.

Stamp duty costs vary by state and territory, but ING’s online calculator can help you estimate how much tax may be due for you.

As stamp duty may have an impactful and individual-specific impact, you should seek independent financial and taxation advice on the specific implications for you.

Lender’s Mortgage Insurance (LMI) may be required by your mortgage provider if you’re borrowing more than 80% of your property price as part of a loan agreement.

Lender Mortgage Insurance, or LMI, can cost thousands of dollars. Depending on factors like the value of your property and savings (you could potentially avoid LMI if you save 20% or more of the deposit in savings), LMI provides protection to lenders in case their customer defaults on the loan agreement.

LMI may be charged again when refinancing your loan.

Mortgage registration: Pay to the government rather than to your lender in order to register your mortgage on property records.

Mortgage registration fees range between $100 to $200 depending on the state or territory where your property is registered.

Transfer Fees
Property transfer fees owed to state governments cover any transfer of property from one person to the next.

Transfer fees vary between states, with some charging a set fee (over $100 in certain cases) while others charge according to your property price – potentially costing thousands in some instances.

Council Rates and Strata Fees Water and council rates may be due upon settlement unless your settlement date coincides with a new payment cycle starting.

“Typically, vendors cover these expenses up until the end of each quarter,” states Kiln. If, however, you move in prior to this being completed then any expenses already covered must be reimbursed from them by you as reimbursement is expected from them for what has already been spent by them.

As part of your move to your new home, additional moving costs could include paying removalists as well as purchasing furniture and appliances for your new place.

Consider other costs such as home and contents insurance and setting up your telephone and internet.

Realestate.com.au and ING Bank (Australia) Limited ABN 24 000 893 292 (‘ING’) have collaborated in producing this article to provide generalised advice that does not take into account your individual objectives, financial situation or needs. In certain instances content provided by third parties and not written or edited by ING is also not covered by our warranties for its accuracy or completeness or reliability; we do not accept liability arising from omissions or errors within its contents either; for that reason ING advises seeking independent advice before acting upon what has been provided herein; Realestate.com.au uses trademarks owned by ING under our arrangement with them to deliver this content.