Hidden Costs When Buying A Home – Are You Prepared?

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Hidden Costs When Buying A Home – Are You Prepared?

Home ownership is the Australian dream, with some saving for years before starting the process.

Everyone knows that buying a home is often the single biggest purchase a person will make in their lifetime. The question then becomes – do you really know true amount that needs to be outlaid from start to move in day?

You would have planned and prepared for monthly mortgage payments, interest rates and the upfront deposit, however, there are other costs that will come into play throughout the course of the home buying process. Be sure to do your sums and budget for all the costs that come with owning a property. These include some obvious expenses as well as costs that may not be on your radar. These ‘unplanned’ costs may not seem to be too large when looked at individually, but they can add up.

As a first home buyer, there are options available to you to help ease the financial strain in the form of the First Home Owners Grant (FHOG), however, these grants cover only a fraction of the overall cost of buying a house. Unplanned expenses can negatively impact your finances and add unnecessary stress to an otherwise enjoyable experience. So rather than be taken by surprise, it’s best to factor these into your budgeting from the onset.

So, what are these unplanned or hidden costs exactly?

Registration Fees

A mortgage registration is a fee charged by state government to register the security on a home loan. The registration fee is paid when a home loan is established and is generally a fairly small fee when compared to other costs involved with buying a house.

Conveyancing and legal fees

When deciding to buy a home you may need to enlist the services of a conveyancer or solicitor. It’s important to note that employing a conveyancer is not mandatory however they are useful in that they can give you advice and valuable information through the settlement process.

Building and Pest Inspections

If there’s one occasion that calls for you to have an extra level of certainty it’s knowing that the home you hoping to one day live in is up to scratch and free of costly pests such as termites or even mould. These inspections may seem like an unnecessary additional cost however they can end up saving you a lot of money and avoidable stress. The key tip here is to get a few quotes prior to starting the house hunting journey that way you know the exact cost to factor into your budget.

Transfer Fees

Depending on your circumstances this may be the largest additional cost of the home buying process. Transfers duties are charged by state government. In QLD first home buyers may be eligible for a transfer duty concession providing the value of the property they are planning on buying is $500,000 or less. After that point first home buyers will be required to pay the applicable transfer duties. Understand what your transfer duty requirements may be by having a chat with the team at First Step Homes.

Loan Establishment Fees

For most, home loans are generally compared by their advertised interest and comparison rate. However, home loan products should also be compared on the basis of any additional fees and chargers the lenders may include in the product. Depending on the lender, fees may be a few hundred dollars. It’s worthwhile doing a bit of extra reading to get a good understanding of what the bank may change you to setup the loan and any additional fees they may charge.

Insurance Fees

If you’re planning on freestanding home or another property which doesn’t have a strata title attached to it; It is generally the case that you will need adequate and current building insurance policy prior to settlement. The are many companies that sell building insurance but it’s worthwhile getting a few quotes to make sure you’re getting the best deal and the best cover. Insurance premiums can be up in the thousands so as a Monday money tip make sure you factor these costs into your overall home buying budget.

It is possible to spend anywhere from a few hundred dollars to a few thousand dollars on just due diligence during the buying process, however, NOT doing so could set you back way more down the line. Planning, research and accurate budgeting is essential to a stress-free buying process.

The key to avoiding any surprises is to research and plan accordingly. Speak to the team at First Step Homes to help guide you through the process and offer solutions suitable to your finances and budget and take the first steps to home ownership.

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