Many property owners have gotten ‘caught out’ in thinking that all they needed to do was come up with a deposit for a portion of the purchase price, get a loan for the rest and then all would be fine. They failed to realise that a lot of other expenses beyond the purchase price were involved.
Each of these are optional and may be recommended by your solicitor or conveyancer. Get quotes so you know what it will cost you. These costs can vary significantly.
• Pest inspection & report - approximately $200+
• Building inspection & report – approximately $400+
• Reports on recent sales in the suburb approximately $150. When a lender looks at what a property is worth, the biggest factor is what similar properties have actually sold for in the past 6 months. You can purchase reports on these on the internet or you could ask you real estate agent to supply this data for free. Either way it will give you the address and a brief description of the property in terms of number of bedrooms and land size and what it sold for. A drive around the suburb looking at these properties will help you understand what properties are actually worth before you start making offers.
• Insurance. When you sign a purchase agreement you enter into certain obligations. You solicitor or conveyance may advise you to take out building insurance when you exchange contracts well prior to settlement to protect your interests.
• Deposit on exchange of contracts or deposit bond. This is paid shortly after you sign to purchase the property. The deposit will typically be 10% of the purchase price, and it is paid to the real estate agent in cash. The percentage may be negotiable. Alternately you can use a deposit bond. A lender such as State Custodians is able to provide one of these. With the bond you will pay a fee of about 1% of the bond value, but that can vary depending on how long it is until settlement.
• Stamp Duty.
• Lenders Mortgage Insurance. You will only need to pay this if you borrow more than 80% of the lender’s valuation of the property. Your lender will help you work out how much it will be.
• Loan establishment costs. For some loans you will be charged an establishment fee, and you could be asked to pay for the lender’s costs of providing a valuation and the legal costs of putting the loan in place for you.
• Your solicitor’s or conveyancer’s fees. Get a quote to know what to expect. Something over $1,000 would not be uncommon. Some charge a flat fee while others have a set amount plus any costs they incur. Make sure you understand which one you are committing to.
• Adjustments of council rates, other fees and taxes. Typically the owner has paid some things in advance, and other items are yet to be billed even though they will cover some days prior to settlement.
• Immediate repairs. Hopefully you have purchased a home that is well maintained and no essential repairs will be needed. It is common to have some painting and perhaps floor coverings done prior to moving in.
• Moving expenses. Even if you do it yourself, expenses will be involved.