What are the The Costs Involved with Buying a Home in Australia?
Buying a home in Australia can be both an exciting and an expensive process. When developing your budget and determining how much you can borrow, It’s also important to be aware of the additional costs involved in the purchasing process.
This article provides an overview of the upfront and ongoing costs associated with buying a home in Australia, including stamp duty, legal fees, and mortgage fees.
Stamp Duty
Stamp duty is a government tax that is levied on the purchase of a property in Australia and only applies to the buyer not the seller.
The amount of stamp duty payable is calculated on the market value or sale price of the property and the state or territory in which it is located, on a sliding scale similar to income tax.
There are some stamp duty exemptions such as First Home Buyer grants and Help to Buy shemes, it’s a good idea to check your state government or territory to see if you are eligible, that could potentially save you money on your property purchase.
It’s important to note that each year the standard transfer duty and premium duty rates are usually adjust to account for inflation. You can check the threshold amounts on your state government or territory website.
Legal and Conveyancing Fees
Legal and Conveyancing fees are the costs associated with hiring a conveyancer or solicitor to assist with the purchase of a property in Australia.
They will help by reviewing your contract, performing checks on the title and drafting the settlement documents. They will also look after transferring the property from the seller to the buyer.
Hiring a solicitor or converyaner is highly recommended to make the purchasing process easier and smoother as it can be quite complicated. Usually costs range between $700 to $2,500, depending on the complexity of the property sale.
Mortgage Fees
Mortgage fees are the costs associated with taking out a home loan to finance the purchase of a property in Australia. Usually lenders aim to be transparent about these fees from the beginning but some may also catch you by surprise, it’s important to check the mortgage fees and details thoroughly before applying for a mortgage.
Mortgage fees can vary depending on the lender, the type of loan, and the loan term. In general, mortgage fees include application or establishment fees, valuation fee, and settlement fees, as well as ongoing fees, such as account keeping fees, offset fees, and annual fees.
When using Joust to find your home loan, we ensure all the fees are made clear upfront so you can better compare your offers.
There is also an additional one-off mortgage registration fee which is to be paid to your state government or territory and acts as security for the loan which enables future buyers to check any claims against the property.
Building and pest inspection fees
A building inspection and pest inspection is strongly recommended when purchasing a property, this can help you avoid any nasty and costly repairs down the road.
The building inspector will check for any structural defects and pests. Building and pest inspection fees can vary depending on the size and age of the property, and the level of detail required in the inspection report.
In general, building and pest inspection fees are calculated as a flat fee, and the cost can range from $300 to $1,000 depending on the property and the services provided.
Lender's mortgage insurance
Lender's mortgage insurance (LMI) is a type of insurance that protects the lender in the event that the borrower defaults on the home loan.
LMI is typically required when the borrower has a small deposit that is less than 20% of the purchase price and a high loan-to-value ratio. LMI is typically added to the loan amount. You may be able to qualify for a LMI waiver if you work in certain high-demand and high-income occupations.
It’s important to note that LMI is not the same as mortgage protection insurance.
Mortgage Insurance
Mortgage protection insurance is a type of optional insurance that’s designed to protect one of your most precious assets, your home. It can cover you, the borrower, in the unfortunate event of involuntary unemployment and inability to repay your home loan due to a severe illness, accident, disability, involuntary loss of job, or death.
Removalist fees
It’s a good idea to think long term, once you have purchased your property and ready to move in, you will most likely need to hire removal services to help you move in to your new place.
Removalist fees can vary depending on the distance and volume of your belongings, as well as the services provided. In general, removalist fees are calculated based on an hourly rate, and the cost can range from $200 to $1,000 depending on the size of the move and the services provided.
Building and contents insurance
It’s essential to ahev building and contents insurance the day of signing the contract to your new home. Building and contents insurance is a type of insurance that covers the costs of repairing or rebuilding your home in the event of damage or loss.
Building and contents insurance is typically required by the lender as a condition of the home loan, and the cost can vary depending on the type and value of the property.
Do your research and shop around for the best deal.
What are The Costs of Upkeep and Owning a Home?
Council rates
Council rates are the charges levied by local councils to fund the provision of services and amenities within their local area. When you buy a new property, you are generally required to pay the seller the remaining yearly or quarterly rates from the day of settlement.
Council rates are typically calculated as a percentage of the property's value, and the rate varies depending on the local council and the value of the property.
In general, council rates are payable on a quarterly or annual basis, and the cost can range from $500 to $2,000 per year depending on the property and the council.
Maintenance and repairs
It’s a good idea to budget for maintenance and repairs each year, these are the costs associated with keeping your home in good condition and fixing any issues that arise over time.
Maintenance and repairs can include regular tasks such as painting, gardening, and cleaning, as well as unexpected costs such
Strata and Body Corporate Costs
If you have purchased an apartment, unit or townhouse you are generally required to pay yearly or quarterly strata or body corporate costs which cover maintenance of the shared areas around the property such as pools, gyms, landscaping and general admin fees.
How to budget for the extra associated costs?
It’s a good idea to create a budget that gives you a complete overview of your income and expenses, whether that be in a excel spreadsheet or a budgeting software package, this will help you keep track and account for any unexpected expenses.
You can also use Jousts free online calculators to help you workout your mortgage payments, stamp duty and comparison rates.
How much should you factor in?
General rule is to factor in upfront costs of about 7% of the purchase price.
Whilst it may be quite overwhelming to see the total amount of upfront costs, you should always check your state government or territory website to see if you are eligible for any home buyer grants and exemptions that can save you money.
Get the home loan interest rate you deserve
Having a good credit score can have a positive impact on the outcome of your home loan application and the interest rate that lenders will be willing to offer you.
Why not put your excellent credit score to work and help you pay off your home loan sooner with a better interest rate?
Create your free home loan profile in just a few minutes and have lenders bid for your home loan with their best offer. In some cases, Joust Live Auction users were able to reduce their home loan rate by as much as 1% on average.
*The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Joust recommends that you consider whether it is appropriate for your circumstances. Joust recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.
