A lot of the time, people forget that there are costs on top of the purchase price of the house! Here, we look at what additional costs come into play when purchasing your new home...
Firstly, there are costs involved in using some of the professionals above. Mortgage advisers are usually free and you wont need to pay anything to the vendors real estate agents but there are costs involved for the below services/professionals;
Solicitor: $500 - $2000
Registered Valuation: $800 - $1200
Building Inspector: $500 - $1000
In most cases, your mortgage adviser will be able to negotiate some cash back from the bank to help cover these expenses but it’s worth noting that you will need to be able to afford to cover these up front, before receiving your cash back from the bank.
Other costs
Insurance
Before the bank will allow you to settle on your property, you will need to take out house insurance to make sure that it is covered in the case it is destroyed or damaged. Depending on a range of factors such as the age of the home, the building materials used, where it’s located and a whole heap of other things, the premiums will vary. It’s best to get a quote on the property during your due diligence period to make sure it can be covered and to see what the cost will be. Expect to pay around $1200 - $2000 per year for a home and contents policy. You’ll usually be able to pay this in monthly instalments.
Rates
You are liable for your share of rates from the date you settle on your property. On settlement day there is likely a portion of rates you will need to pay back to the vendor. Your solicitor will let you know what the amount will be. All councils have an online rating database where you can check what the rates on the property are. Allow 2-4k per annum on average.
Immediate work to property
It could be that the home you purchase needs a gate put in, to keep the kids safe. Some repairs to avoid further damage (like a water leak) or a new paint job if you just can't stand the bright pink walls! It's good to consider things like this when you are making offers and reading through the builders report to see what you may need to put aside to make immediate changes to the property.
Remember that there is always a little bit more you’ll need to pay for than the house itself so it’s a good idea to factor in a buffer of around $2000 - $4000 on top of the price of the house. As discussed above, we are usually able to obtain a portion of cash back from the bank to cover some of these expenses so have a chat to the team at My Mortgage when the time comes about your cash back options.
Check out Part 5: What are the banks looking for?