The unexpected costs of buying property
Purchasing property is an exciting time - an experience to celebrate and enjoy. So, it's important for buyers to know about the additional costs associated with purchasing property upfront, to prevent any nasty surprises later on.
As Alan Lakein put so well, "planning is bringing the future into the present so that you can do something about it now". Being aware of all the costs involved with purchasing property allows buyers to plan and make allowances. Here is an overview of costs buyers need to be made aware of.
At the time of purchase, buyers will need to pay a state-imposed stamp duty. This fee is different in each state but buyers can check expected costs on the Loan Market stamp duty calculator or ask me.
Buyers will require either a solicitor, conveyancer or settlement agent to legally transfer the purchased property. Part of their role is to conduct title searches which ensures the seller is entitled to release the property.
All lenders and products are different but it's safe to expect some home loan fees such as loan application, loan approval and settlement fees. These costs are another reason for buyers to use a mortgage broker who can do the shopping around for them.
A building inspection report will need to be purchased before exchanging contracts to highlight any significant building defects or issues. This will help safeguard the buyer against potential, much larger, costs that could appear down the track.
Depending on the age and materials of the property, it may also be worth investing in a pest inspection report.
Lenders mortgage insurance (LMI)
LMI protects the lender if the buyer becomes unable to repay the loan and can apply to buyers who borrow a high percentage of a property's value (generally over 80%), have inconsistent income or are self-employed.
A number of factors influence the premium including loan amount, loan type and property value.
Moving costs commonly include removalist or truck hire charges and the purchase of boxes.
If a property was sold to purchase a new one then I recommend buyers raise the costs involved with their real estate agent early on to factor them in.