We all want our castle. And while we spend years saving our deposits, people can go unwarned about the additional costs that come with owning our own homes and buying investment properties. Greater awareness of the attendant costs of home ownership will allow you to be better prepared, and ready for all the extra costs of buying your castle.
Here are the full costs of buying a house.
Applying for home loans is not only stressful, it comes at a price. It ranges, but generally sits around $600. Credit card checks, contracts, time resources- all bundled into an unexpected extra cost.
You can use either a conveyancer or a solicitor to handle the cost of transferring ownership legally. It’s not a cost you can dodge, so better to factor it in when saving your initial amount. Costs can range from around a grand to $4,000. Conveyancers are generally cheaper. I’ve read experts who have suggested using solicitors as they have greater qualifications should things go pear-shaped, but that’s really up to you.
A sting in the financial tail, there are a lot of stamp duty calculators online and they are well worth looking at, as the cost ranges depending on the value of your property and which state you live in. First home buyers can apply for exceptions, but the Yahoo! Finance article suggests the cost of stamp duty can be as much as $10,000 for a $300,000 property- no small number to have to factor in to your calculations.
Value And Validate
The lender needs to do due diligence for the security of their loan, and guess who foots that bill. You guessed right. They will value your property in order to ensure the asset is enough to cover the loan. The part where things can become unstuck is when your property is valued at a lower price than what you paid for it, but that’s another story. The point, for this article, is that it’s another cost and you need to ask whether it has been included as part of your application cost.
You don’t need to get a building inspection, but on your head be it should there be serious structural problems you weren’t aware of. The cost can be between $200 to a $1000, but it’s a worthwhile investment.
Move to a spiffy suburb and you’ll have to pay for the privilege. Most rates are around $400 every 6 months and pay for local services.
Only an issue for people buying apartments and townhouses, this is the cost of upkeep for the complex, apart from your own property. Some may be higher than others, but it’s worth thinking about the value-adding of what they provide. Maintaining lawns, fences, pools, elevators take big expenses off your backs, and a friend of mine recently bought a place where the strata fees include painting your house every 5 years. A big win, in my opinion.
If you’ve borrowed more than 90% of the cost of the property, you’ll need to get mortgage insurance. The cost depends on the price of the property. Similarly, you’ll need to think about getting home and contents insurance. Especially if you have a mortgage, where you asset could be destroyed leaving you holding a big debt and no means to pay it off.
Don’t forget about moving costs, ongoing maintenance costs, utilities, furnishing your new home. The extra costs might seem overwhelming, but buying a house is an exciting time and big investment in your future so by preparing properly, you’ll meet the challenge head-on.