Purchase Fees
Be Aware of Buying Fees
A&C Finance Group often see instances where exuberant prospective buyers come to us believing they have saved a 10% or 20% deposit, only to realise they have overlooked buying (and sometimes selling) costs.
Below is a quick reference guide outlining some of the government, bank and legal charges associated with a property purchase. Please contact us if you have any questions regarding the full cost of your purchase.
Stamp Duty – This is generally the main cost to budget for when buying a home. Stamp duty is a government tax, levied on the purchase value of the property, with the cost differing in each state or territory. First home buyers and anyone building a property may be eligible for concessions, but it is highly recommended you speak with us to confirm exactly what the full stamp duty expense and related mortgage registration costs will be.
Lenders Mortgage Insurance (LMI) – Contrary to what many people believe, this is an expense that covers the bank in case customers default on their loan. LMI is only applicable to property loans where the loan to value ratio (LVR) is >80%, with the cost varying widely depending on the total amount borrowed and the value of your home being used as security.
Legal Costs – normally in the form of a conveyancer or solicitor, buyers need a professional to transfer legal ownership of the property they are purchasing. Your legal representative will also need to conduct searches to ensure the vendor is legally entitled to sell the property. This usually costs approximately $1,000.
Pest and Building Inspections – This is a critical step that is often overlooked. Buyers need to be certain the building is structurally sound and doesn’t have any issues with pests, as both can be extremely expensive to fix down the track. For the cost of approximately $450, it is certainly worth paying prior to finalising the purchase.
Borrowing Costs – Lenders will often charge a range of related fees such as application, valuation and settlement fees, all of which need to be considered when budgeting for any property purchase. We will be able to advise costs for the different financial institutions, but this ranges from approximately $400-$1,000 depending on the product and lender.
Other items to consider – Whilst expenses can seem overwhelming, some relief is available. The First Home Owners Grant (FHOG) is accessible for eligible applicants, which can assist with some of the abovementioned expenses. The Principal Place of Residence (PPR) concession also applies where the buyer will reside in the purchased property following settlement for at least a 12 month period.
As well as the abovementioned costs, borrowers also need to budget for other potential expenses including moving costs, furniture, renovations, home/contents insurance and council rates or strata fees. It is critical to plan for what is required at or shortly after settlement so unnecessary stress can be avoided during what should be an exciting time.
Given the complexities involved with calculating your deposit, fees and other charges, it is understandable that the majority of our clients need assistance with working out exactly how much is required to fund a purchase. Please contact A&C Finance Group if you have any questions or concerns about how much you need to save for your purchase.