Spring time is the most popular time of year for open houses and auctions. But buying a property is a costly exercise and a massive commitment with a number of expenses in addition to the costs of saving for a deposit (and subsequent mortgage repayments). Assessing the full cost of purchasing a property before you begin your hunt will help you save and budget more effectively, have a better idea of what you can actually afford and help to prepared you for the road ahead. So, what costs do you need to consider?
What will I need to pay for?
- The deposit. Generally, the largest upfront cost of buying a first home. This ideally should be 20% of the property’s value to avoid lenders mortgage insurance, but there are certainly loans available which allow you to borrow more than 80% (in some cases up to 100%) of the purchase price.
- Lender’s fees as charged by your mortgage provider.
- Stamp duty, in some cases there may be a reduction for first time buyers in some states.
- Solicitors’ fees and costs associated with the legal aspects of purchasing a property.
- Inspection fees, pest inspections, and costs such as mortgage insurance.
- Moving costs include hiring a removal van/service, cleaning the old property, any renovations to the new property (from extensive updates such as a new kitchen or bathroom to a fresh lick of paint) as well as the costs of connecting utilities and installation of appliances such as gas heaters and dishwashers.
Make sure you have a carefully worked out budget and plan in place to ensure that you can keep up with mortgage repayments once you’ve moved in, or you could see your home repossessed. Keep in mind also that interest rates are currently at an all-time low and WILL increase in the future, meaning so will your mortgage repayments. It’s important to factor this in when assessing affordability to ensure you can afford your mortgage even when interest rates go up.
While it may seem a tad off-putting having to consider all the above costs while searching for your dream home, you'll be grateful to have done your homework. Having a sound financial plan in place will protect you and your family and leave you free to enjoy your new home to the full without any surprises down the track.
Grants and financial support
There may be financial help available if you are purchasing your first home. Investigate whether you are eligible for the various first home-owners grants and discounts which have the potential to reduce your upfront costs.
The amount you can expect to borrow as a mortgage loan will vary depending on your own personal circumstances and the provider that you choose. It’s a good idea to do some research into the different types of mortgage loan available and to shop around for the right provider to ensure that you get the best deal or rate that you can. Once you’ve saved your money, and you’re ready to buy, it’s time to start looking around for the right property for your needs and budget.