21 Feb What are the added costs of Purchasing a Property?
When buying a property, there are often more costs than just the purchase price, so we have helped create a list of the extra costs so you don’t forget:
- Stamp duty
Stamp duty must be paid for your mortgage documents to be legal. This is a tax levied by the state or territory government on the purchase value of the property or the market value, whichever is greater.
- Legal costs
For the legal transfer of ownership of the property, this 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.
Pest and building inspections are also an added cost, but the this can also from dealing with a major building problem after the purchase is complete. The amount of this is often dependent on the size of the property.
- Agent fees
For first-home buyers, they 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.
- Borrowing costs
Lenders will have application, valuation and settlement or loan approval fees that will vary depending on the lender. Finance Brokers are familiar with these fees and will help you take them into account when choosing a lender.
Depending on your loan-to-valuation ratio (LVR), you may be required to take out lenders mortgage insurance (LMI) in which the borrower pays for, LMI is not insurance for the borrower; it protects the lender should you default on the loan. You may also need building insurance if you are not purchasing a strata property.