What are the costs of purchasing a property?
When beginning the search for your property it is important to consider not only the deposit you will require, but what other costs are likely to be involved in completing your purchase.
Don’t fall into the trap of thinking that a 5% deposit is all you require and the bank will lend you the rest!
Below are some of the costs that you will need to consider before committing to a property purchase:
The minimum deposit that you will require will be 5% of the property’s purchase price. Keep in mind that anything less than a 20% deposit will attract a Lenders Mortgage Insurance (LMI) premium. The LMI premium is a one off payment that can often be capitalised on top of the loan amount and repaid over the term of the loan. The lower the deposit you have, the higher the LMI premium will be.
- Stamp Duty
Transfer Stamp Duty and other government fees will be payable on all property transactions (unless you are eligible for First Home Owners Grants or other exemptions). Stamp Duty differs from state to state but as a rule you should allow up to 5% of the purchase price for these charges, a quick calculator can be found at http://www.realestate.com.au/blog/stamp-duty-calculator
- Legal Costs
It is advisable that you seek the assistance of a solicitor or conveyancer to guide you through the legal processes involved with your property purchase. This can cost anywhere between $800 - $2,000 depending on the complexity of your transaction.
- Incidental Costs
Other costs that you may need to consider are:
- Lenders application/establishment fees. These can range from $0 - $1,000 depending on the lender and loan product chosen
- Building and Pest Inspection costs. It is advisable to obtain an inspection on all properties, particularly older properties to avoid any nasty surprises once you take ownership of the property
- Other settlement costs such as pro rata council rates, water rates, strata levies, etc. Your legal representative will advise if any of these costs are applicable.
- Does the property require renovation?
If you are considering renovating the property and only offering a minimum deposit, you will also need to factor the cost of any renovation works into your calculations.
Before you purchase your next property please call our mortgage broker, Anthony Martin on (02) 9954 5044 for a confidential discussion. Anthony can quickly advise you on the costs associated with your purchase.