For most people, buying a house will be the single largest financial investment they’re ever likely to make and the biggest question will be: Can I afford this?
The decision to buy a home is a huge financial undertaking and one that is not to be taken lightly. It’s important to assess your finances before committing to a purchase to ensure that you will still be able to meet your monthly financial obligations with a sufficient contingency amount for maintenance and other emergencies which may crop up unexpectedly in and around the house.
Just as a long-term financial assessment is important, it is crucial that you are aware of all additional up-front costs associated with buying a house, costs that you need to factor in to ensure that you have sufficient funds to complete the sale without the possibility of defaulting on your first mortgage repayment.
We’ve compiled a list of possible costs for you to be mindful of. Take note that some of these costs are based on the value of the property so it is recommended that you confirm these costs with your property lawyer to avoid any nasty surprises.
The following additional up-front costs may include fees for:
- Loan application – some lenders may charge you a fee to process your loan application;
- Pest and building inspection – although these inspections are not mandatory, they will alert you to any structural and pest control issues;
- Stamp duty – this is a non-optional state government tax. The amount of stamp duty payable on a property purchase will depend on the value of the property;
- Conveyancing – this will be the costs associated with all the legal documentation. Check with your property lawyer what all is included in this fee;
- Your portion of council and utility rates – upon transfer, the council and utility rates will be apportioned based on each parties’ liabilities during the rating period;
- Electricity and telephone reconnections – certain services may be disconnected when a property changes ownership; and
- Removal costs –Check with your local removal companies for quotes to give you an idea of what this will amount to.
When you buy property, you’ll be paying more than just the amount on the price tag. Contact your local property lawyer for guidance on possible costs involved in the purchase of your dream home to avoid financial disappointment or difficulties further on down the line.
