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The Costs involved in buying/borrowing
The sum you'll actually spend on buying your home will be thousands of dollars higher than the "sale" price. Work out your extra costs in advance to avoid a shock.
Taxes, fees, stamp duty and moving costs add thousands to the cost of a new home. Many first home buyers overlook these costs when planning their purchase.
One surprised new homeowner was quoted in the Sydney Morning Herald newspaper declaring: "The excess costs on top of the cost of the mortgage are incredible." Knowing exactly what to expect helps you save for the deposit and avoid disappointment.
Costs include:
Tip: Taxes, fees and charges can add thousands to the cost of a home. Plan ahead to avoid unexpected financial hardship.
Lender's Fees
Almost all lenders charge a one-off establishment fee on new home loans of between $600 and $1000. Some lenders will waive the fees to get your business. Most banks also charge monthly or annual account fees.
Inspection Costs
Before you buy, it pays to get a building and pest inspection. Building inspections range from $250 for a small house or flat, to more than $1000 for a large property. Pest inspections cost around $100.
Stamp Duty
All state governments charge stamp duty on the amount borrowed and the purchase price. The rates vary between states and depending on the price of the property, can add between three and five per cent to the cost of an average home in Sydney or Melbourne.
As an example - stamp duties on a $350,000 home with a $250,000 home loan*:- NSW $12,181
- Victoria $17,624
- Queensland $6,720
*Some state governments have concessions for first home buyers.
Legal Costs
The legal transfer of ownership is known as conveyancing and is generally performed by a solicitor, professional conveyancer or estate agent. It costs between $600 and $800 for an average priced home. Do-it-yourself kits are available for between $70 and $150.
Insurance
If your deposit is less than 20 per cent, your lender will probably charge mortgage insurance. This covers them in case you can't make the payments. Fees vary depending on the lender, the purchase price and the deposit but expect to pay between $1000 and $1200 for a $100,000 home with a $90,000 home loan. Most lenders will also insist you take out building insurance. Contents insurance and income insurance are also recommended.
Moving Costs
Professional removalists take much of the stress out of moving house but can cost between $500 and $5000. Renting a trailer or van and doing it yourself should cost less than $500.
Estate Agent Fees
If you are selling your home to buy another, don't forget estate agents' fees. Most charge a commission of between 2 and 8 per cent on the sale price.
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