The upfront costs of buying a property

Purchasing a property is one of the biggest financial transactions you will ever make, but there’s more than just the deposit to consider when it comes to upfront costs.

During the buying process, there are other expenses involved, including government charges, inspections, and legal fees.

So, let’s take a brief look at the costs involved when it comes to buying a property.

The deposit

Saving for the deposit is what most people focus on in the lead-up to purchasing a property. And yes, this is likely to be the biggest upfront cost.

Depending on your circumstances, the minimum required deposit is 10-20 per cent of the property price.

Bear in mind, of you have less than 20 per cent as the deposit, most banks will require you to take out lenders mortgage insurance.

Stamp duty

The next biggest expense when it comes to purchasing is stamp duty, which varies from state to state.

The best advice is to check your relevant state or territory government website to estimate how much this cost might be.

In some instances, there are also stamp duty exemptions for first home buyers.

Transfer fees

In addition to stamp duty there is also a transfer fee, which is paid to the relevant government to cover the cost of transferring the title of the property.

There’s a big discrepancy on how much this costs depending on what state or territory you’re in, so check with your relevant government website to see whether this is likely to set you back a couple of hundred dollars or up to a couple of thousand.

Legal fees

It’s important to have good legal advice when you’re purchasing a property.

Whether you opt to work with a solicitor or conveyancer, this legal professional will guide you through the purchasing process, ensuring all required checks are undertaken and the boxes are ticked at the right stage, while handling all necessary paperwork.

Legal fees also vary depending on the complexity of the transaction, but according to the National Australia Bank cost anywhere between $700 and $2500.

Required inspections

Purchasing a property is a major financial commitment, and it’s important you do your due diligence at the outset.

Part of this involves undertaking all necessary inspections, such as pest and building checks by a professional.

Lending fees

It’s likely your lender will have specific charges that relate to your loan, and these might range from mortgage application fees to lenders mortgage insurance (if your deposit is less than 20 per cent).

Ask your bank to itemise the fees associated with your loan, and bear in mind most states and territory governments also charge a mortgage registration fee.

Home, building and contents insurance

With such a big investment at stake, you’re going to want to protect it with insurance.

It’s also worth recognising that the insurance responsibility falls on the prospective buyer at different times, depending on what state you’re in.

For example, in some states the property needs to be insured by settlement day, but in others, such as Queensland, the buyer needs to have insurance in place by 5pm on the first business day after the contract is signed.

Moving costs

Finally, the cost of moving is something many people overlook, but it can add up, depending on where you are moving to and how much you are willing to do yourself.

Don’t forget to budget for this expense well in advance of settlement date.

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