The added cost of purchasing property. - Laxmi Home Loans

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The added cost of purchasing property.

There can be many hidden costs which are associated while purchasing a property. Sometimes, the purchaser can end up paying for costs which they might have been unaware of previously.

Buying a property carries more costs than just the purchase price, so don’t forget to account for these extras.

In addition to moving costs, council rates, strata fees, renovations and furniture, homebuyers face additional fees to complete their property purchase.

  1. Stamp duty

Stamp Duty is payable on purchases of properties. There are two different types of Stamp Duty:

  • – Stamp Duty on the Transfer of Title, which is charged by state governments and paid by the purchaser.
  • – Stamp Duty on the Mortgage – this duty has been abolished for most owners occupied and investment property loans but you may be required to pay it on other types of loans. Stamp Duty varies by state to state. The information on Stamp Duty or eligibility for an exception by state is available on the following websites:

Click here to calculate stamp duty.

  • Legal Cost

The legal transfer of ownership of the property will require a solicitor, conveyancer or settlement agent. He or she will perform property and title searches to ensure the seller is entitled to release the property, for instance, by checking the strata body corporate records.

  • It could cost, Lender’s legal cost ($100 -$350)
  • Inspection

Pest and building inspections are an added cost, but they can save you from dealing with a major building problem after the purchase is complete. The amount is often dependent on the size of the property.

  • If it is strata property, then strata search fee cost up to $275
  • It could cost from $225 -$600)
  • Agent Fees

First-home buyers don’t have to worry about paying commission, since it is charged to the vendor of the property, most often as a percentage of the sale price. However, if you’re selling your current home to buy another, you’ll probably have to take these fees into account.

  • The cost could be from 1% – 5% or more of the property sales price.
  • Borrowing Cost

Lenders have application, valuation and settlement or loan approval fees that vary depending on the lender. Finance Brokers are familiar with these fees and can help you take them into account when choosing a lender.

  • – Government cost ( $200 – $300 )
  • – Application or Establishment cost  ( $0 -$700 )
  • – Property valuation cost ( $0- $600 )
  • – Break cost ( If your home loan is in fixed ) – If Refinancing only.
  • – Discharge cost ($200-$400) – If Refinancing only
  • – Additional costs (Annual Fee, monthly fee etc) – $8 – $395
  • Insurance

Lender Mortgage Insurance (LMI) is a risk assessment ration that banks and lender use before funding. It is calculated in following way.

LVR = Borrowing loan amount / value of the property

Depending on your loan-to-valuation ratio (LVR) required to take out lenders mortgage insurance (LMI). When LVR is greater than 80% LMI is required. *conditions apply*

Although the borrower pays for it, LMI is not insurance for the borrower; it protects the lender in case of default on the loan.

( Note: LMI amounts are usually capitalised to loan amount )

You may also need building insurance if you are not purchasing a strata property. Income Protection, Home and Content insurance are also highly recommended too.

To know more, get in touch with one of our broker at Laxmi Home Loans.

A Guide to the Cost of Home Purchase

Note: The get an actual cost talk your solicitor or broker.

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