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The True Cost of Buying a Home

15.06.20 - Finance, Getting Started

When you’re buying a house for the first time, the number you’re most likely looking at is the market value of the house. And this is the amount that sticks in your mind. You budget for it, and you calculate how much deposit you will need to save. But anyone who has purchased at least one property in the past will tell you: there are many hidden costs of buying a house.

While this can make the prospect of buying a home even more worrying for some, it’s always best to be prepared – that way, you won’t be tripped up by costs you weren’t expecting. Here’s how you can better prepare yourself for the costs of buying your first home.

First-Time Homeowners – What You Need To Know

For first-time homeowners, the cost of buying a home can be significantly less than someone who is purchasing their second property. This is due to a number of grants that have been made available to first-time buyers, with the goal of helping buyers break into the property market for the first time.

First Home Owner Grant (FHOG)

This is the best-known grant out there for first-time home owners, and it’s important to factor in when totalling up the true cost of buying a house. The grant differs slightly from state to state, but in Queensland for example, you will receive $15,000 towards buying your first new house or townhouse, or building a new home. You cannot use the grant to purchase an established house, and the value of the home (including the land) must be less than $750,000.

First Home Concession

As we will later discuss, one of the biggest hidden costs of buying a house is stamp duty. However, as a first home buyer, you won’t pay stamp duty on a house valued at $550,000 (depending on the state in which you live) or less.

First Home Owner Deposit Scheme

On January 1st 2020, the Australian Government introduced a scheme to help first home buyers purchase their first home sooner. Under this new scheme, the government guarantees part of the eligible first home buyer’s home loan – as much as 95%. While the scheme is not available to everybody – only one in 10 who apply for the scheme will actually get it – it is still worth applying for. The property price thresholds do vary from state to state, so be sure to check what is available in your state.

Up-Front Costs Of Buying A House

hidden costs of buying a house

You’d be surprised at how many fees are involved when you’re working out the costs involved in buying a house – but thankfully, a number of these fees are waived for first-time home buyers.

If you’re purchasing your second home however, here are some of the fees you can expect.

One-off government fees

  • Transfer registration
  • Stamp duty

One-off home financing fees

  • Mortgage registration
  • Loan establishment fee
  • Settlement attendance fee
  • Lenders’ Mortgage Insurance arrangement fee
  • Lenders’ Mortgage Insurance (if you cannot meet a 20% deposit)
  • Rate lock fee

One-off property costs

  • Property valuation
  • Conveyance fee
  • Building inspection
  • Pest inspection

Yearly and mortgage costs

  • Mortgage repayments
  • Home and contents insurance
  • Strata fees/body corporate (if purchasing an apartment)
  • Council rates (if purchasing a house)

The exact pricing of these fees will depend on the cost of your home, of course.

Aside from these costs, there are a few more practical things that contribute to the hidden costs of buying a home. These include:

  • Removalist fees, unless you’re ready to do the hard work yourself
  • Professional cleaning, if the previous owners/tenants left the property untidy
  • Repairs
  • Landscaping
  • Laying out new carpet and repainting walls.

The Cost Of Building A Home

It’s a little more difficult to determine the cost of building a home in Australia, since there are so many variables that can affect the price, including lot size and your final choice of inclusions. For more information about the home-building process, speak to us at Domaine Homes today.

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