When it comes to purchasing property, especially if it’s your first home, it can be considered one of the biggest decisions in any person’s life. Buying real estate can be incredibly confusing for first home buyers, the initial excitement of house hunting and home inspections can often be overwhelming to the fact that common mistakes can often be overlooked. The most common mistake for first time buyers is concentrating solely on a deposit when there also exists a number of additional costs related to purchasing that should also be considered in one’s budget.
Is a tax payable when buying and selling property. Stamp duty is necessary and unavoidable and is usually dependant on the value of the home, can differ between states and the whether you are a first home buyer or not. Many states in Australia do offer discounts on stamp duty when buying your first home to encourage young home owners to enter the market, though stamp duty costs can be an overwhelming amount, discounts usually work out to be thousands of dollars in savings to offset the cost of home ownership.
Title Transfer fee
When property is bought and sold it is necessary to change the title of the property over to the new owner. This is carried out at the State revenue office and can cost on average $2,500.
Mortgage registration fee and Loan Application Fee
Mortgage registration is charged by your lender and is a fee on top of your borrowings to register your mortgage and can cost on average $200. A loan application fee is a fee payable which usually covers all the documents and paperwork, not to mention the time involved in organizing the loan and can cost on average $1,000. Each lender is different and there may be products and packages offered by the banks where these fees do not apply. Some lenders are negotiable and are happy to not charge these fees just to win your business.
Lenders Mortgage Insurance
This is provided as a type of insurance protection for the lender and is only applicable for borrowers who do not have the minimum twenty percent deposit funded. It protects the lender in the event you are unable to adequately make your mortgage repayments. Lenders Mortgage Insurance is an amount you have to pay in order to be able to meet the requirement to borrow more than 80% of the property value.
The importance of a good property solicitor to go over all the legal matter and thoroughly comb through the contract will help if anything unforeseen occurs. Not only can they help you understand all the legal paperwork, but they can help to represent you at settlement to ensure everything is completed smoothly without hassle. Costs can be anywhere between $800 to a few thousand dollars.
As you can see, buying a new home can be one of the most rewarding but yet complex matters in any person’s life. To avoid budget blow outs and ensure affordability, it is recommended to carry out research and understand the market value and costs associated with the type of property you are looking for. This way you can enjoy a smooth process and have a positive buying experience.