The costs when buying a house

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Have you been searching domain and realestate.com, looking at houses, dreaming that you could buy one?  Have you wondered where it is that you start?  What steps you need to take to make it a reality? Whilst the tools to find the house have never been better, the process of actually buying a property can be complex and given that most people don’t buy a house every week, the knowledge is not always easy to find.

Property buying costs

In this article I will take you through the most common costs associated with buying a house.

What are the costs associated with purchasing a property?

Stamp duty

The biggest cost associated with purchasing a property is stamp duty. Stamp duty is a tax paid to State Governments whenever a property’s ownership changes from one person to another.  It is calculated based on the sale price.   Most state governments offer concessional rates, or full exemptions, on stamp duty if the purchase price is under a certain threshold.  To calculate the stamp duty payable on property you are considering purchasing click here.  Remember if you are buying a property in joint names both parties must be eligible first home buyers to receive the concessions and exemptions.

Transfer Registration fees:

This is fee charged by State Governments. This is an administrative fee charged to change the property title into your name.  Whilst in NSW, Tasmania, Western Australia and the Northern Territory this fee is less than $200, in Queensland it is $1231, Victoria it is $1284 and in South Australia it is $3,897.00!

Mortgage registration fee:

If you borrow money from any lender in Australia to buy a property they will want to register their mortgage against your title and hold the title to your property as security for the loan.  The State Goverments charge a registration fee to do this. In all states of Australia this fee is less than $200.

Borrowing costs:

If you are looking to borrow money from a lender to buy a property they are unlikely to charge you an application fee but most will pass on the cost of their loan preparation legal fees at settlement (deduct it from the loan fees).     The most expensive lenders legals is probably around $600 but some charge nothing at all.

Cheque fees:

The contract to purchase is prepared by the vendor and usually stipulates that the purchaser must pay for a minimum number of bank cheques. This can be any number but it is usually between 5 and 10.  Most banks charge around $10 per cheque.  A move to electronic settlements means that cheque fees are becoming obsolete however there is still a fee payable to access electronic settlement so one really cancels out the other.

Adjustments:

Council and water rates, and strata levies are adjusted on settlement so that the rates/levies are paid until the end of the quarter in which settlement happens.  The rates are allocated between the vendor and purchaser on a pro-rate basis. For example if settlement is on the 31st July and the rates are $450 for the quarter, and there are 92 days between 1 July and 30 September (The quarter) then the vendor would pay 31 days of the rates and you would be required to pay 61 days of rates. $450/92 = $4.90 per day x 61 days = $298.90.  Strata levies and water rates are calculated the same way.

Conveyancer or solicitor costs:

A conveyancer or solicitor is the person who takes care of the legal aspect related to the purchase. Their job is to explain the contract to you and assist you to enter into and complete a legal contract which is required when you buy a house.  Most conveyancers and many solicitors, but not all, will charge a flat fee for conveyancing services and pass on the costs of any disbursements that they incur for search and enquiry fees, title insurance etc.   You should expect that the cost will be somewhere between $1500 and $2000 for the conveyance and disbursements.

Building and Pest Inspection:

There is no legal requirement to get a building and pest inspection on a property. But when it is probably the most expensive purchase you will ever make, spending around $600 to make sure that the property is not termite infested or structurally unsound is a good idea.  In my experience almost everyone buying a house obtains these reports.

Given the above to buy a property in NSW you are looking at costs associated with buying a property of around $3,500.00 plus stamp duty.

If you would like assistance to calculate the costs of buying a property at a number of different purchase price points then please feel free to send me, Margaret Godfrey, Mortgage Broker Newcastle, an email to mgodfrey@smartline.com.au  or call 0451 471 061 with the details and I will be happy to provide you with an obligation free purchase cost estimator.

 

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