Prepare for the Unexpected Costs of Buying Property
If you’re in the market for your new home or investment property, there are many things to consider, but for most people cost is number one. For first time buyers in particular, the amount of hidden charges along the way can be both surprising and frustrating. It’s important for prospective buyers to do their homework well before beginning their search to keep their budget on track.
One of the most substantial costs to take into account early on is stamp duty. Charges for this vary depending on the price of the property and which state it is in. In New South Wales, for example, current first time buyers purchasing an established home as a primary residence valued at $350,000 can expect to pay $11,240 in stamp duty. There are also some grants available for first time buyers, and I can take your clients through these options and see if they qualify.
If your client is seriously interested in a property, pre-purchase inspections can be expensive but are necessary. The property should undergo thorough building, land and pest inspections before any contracts are signed to make sure issues are picked up before purchase. Costs for this can vary from anywhere between $200 - $1000, so it’s worth shopping around. It’s also important to take into consideration whether the property is in need of any renovations and what ongoing council or strata fees might look like. These should be factored into the budget from the outset.
Once a property purchase is ready to be finalised, buyers will need to call on the expertise of a conveyancer, or a conveyancing solicitor to legalise the settlement and title transfers. Some providers charge set fees, whilst others work on an hourly rate. Depending on the complexity of the purchase, this can make a considerable difference to final costs; the average is around $900. Check that your conveyancer is licensed via the Australian Institute of Conveyancers or the ACT and Queensland Law Societies, depending on where you live.
As an ongoing expense, finding the right mortgage is crucial. Mortgage brokers are the experts in finding their clients the right solution for their situation, and can also help buyers avoid pricey set up fees added on by lenders. Remember, deposits of less than 20% may require lenders mortgage insurance to protect lenders against a payment default.
Some unexpected costs can’t be avoided; however, savvy planning, shopping around and taking the time to find the right property and providers will likely save your client money in the long run.