Dear %%First Name%%
are the costs of buying my first home?
costs associated with getting into your first home can be split between the
upfront costs and the ongoing costs. But there are lots of hidden
costs, which although not huge on their own can add up and catch you by surprise.
The upfront costs are the costs you will need to cover before or at the time
of settlement of your purchase and they include;
Home loan application fee
A loan application or establishment fee can be as much as $1,000. Not
all lenders charge this, however some of these loans with lower entry costs
can have higher ongoing costs, costing you more in the long run or, may not
have all the features you need.
Valuation and lenders legal fees
The lender is likely to require the property you are buying to be valued by
a registered valuer to ensure you are paying what it is worth. The
valuation fee, usually about $300 will normally be incorporated into the
application fee. Some lenders may also charge a separate fee for their
legal costs - up to $500 generally.
Lenders Mortgage Insurance (LMI)
This premium covers the lender if you default on your home loan repayments
and they are forced to sell the home. The insurance covers them if
the home is sold for less than the outstanding loan amount. It is
normally charged when you borrow more than 80% of the value of your new home.
The premium payable by you will vary between lenders sometimes quite significantly,
so it is a good idea to discuss this with your broker so that you don’t
pay more than you have to.
Your legal fees
The process of transferring the property you buy into your name legally is
called conveyancing. The conveyancing fees will also vary from state
to state depending on the location of the property itself as well as the
type of property it is. You should obtain quotes as prices can vary
Building, pest and strata reports
It is wise but not compulsory to do a pest and building report on the property
to check for structural faults or pest infestations which may not be visible
or evident on the surface. Allow approximately $200 to $500 for each
If buying a unit, townhouse or villa you should look at the records of the
body corporate or arrange for your conveyancer/solicitor to do this for you. You
can find out about the building you are going to buy into e.g., do all owners
get along, are there any special levies due or being discussed which could
cost you sometimes thousands of dollars, are you allowed to keep pets etc.
The ongoing costs are ones you may have encountered before, if you had previously
been renting for instance. If you had been living at home some of these
may surprise you by how they can add up;
Phone and electricity
You may have to pay a bond to have these services connected
This is payable to your local water authority. You will pay for the water
service and for the water consumption
The rates will vary depending on your council area and property
Insurance - building and contents
If your new home is part of a body corporate, the premium for building insurance
may be incorporated with your strata levies. You should think about
adding home and contents insurance as well.
Strata or Body Corporate fees
These will vary depending on the building you are buying into. Things
which can impact on the strata levies can be the age of the building, whether
it has a lift, swimming pool or other such facilities, the number of units
in the block, the size of your unit etc.
You will have to pay for any ongoing maintenance on the property.
Don't be overwhelmed by what seems to be a costly or complicated process. Owning
your own home is the great Aussie Dream and we can help you to achieve this,
so please talk to us about any queries you may have.
Until next time...