Buying a home, especially for the first time, can leave you counting your costs! Make sure you understand what costs are involved in your purchase to ensure you are not left short or over budget.
So, what costs other than the purchase price do you need to budget for?
1. Stamp duty
One of the biggest additional costs is stamp duty (also known as transfer duty). Stamp duty is a government tax imposed on property transfers and is calculated on the purchase price. In some situations, buyers may be eligible for stamp duty exemptions or discounts, such as first home buyers. Contact Lawlab to help you calculate stamp duty payable or to find out if you’re eligible for a stamp duty exemption or discount.
2. Legal fees
A good conveyancing lawyer is an essential member of your property purchase team. Lawyers have the training and experience to review your contract and address any issues before you bid at an auction or make an offer. Lawlab’s legal team will reduce the stress of buying property and not only negotiate with the seller’s lawyer but will also organise the complicated settlement process as well. The quality advice and high service levels you can expect from lawyers like Lawlab may cost a little more than a local conveyancer but it is worth investing in a lawyer to handle one of the biggest financial decisions of your life. You will be guided through the conveyancing process be a legal advisor using digital tools. Our legal fees for a standard purchase are fixed. Contact Lawlab for a quote.
3. Property inspections and searches (expenses)
Less well known but very important is to factor in the costs for ordering searches from government authorities so you can ensure all liabilities are accounted for at settlement and you don’t end up with a bill after settlement that the seller should have paid. Check whether your lawyer has accounted for these or provided an estimate in their quote. Examples of searches are title searches, land tax searches, council rates search, strata corporation search, water and sewerage enquiries, copies of plans and any additional searches that are specific for your property. As a rule of thumb, we suggest you allow for $200-$500 depending on the property and location.
You wouldn’t want to end up with a lemon of a home so make sure you budget for property inspections like building and pest inspections and strata inspections. These inspections will reveal any defects or significant issues with the property. Costs can vary depending on the property type and location but as a rule of thumb, a building and pest inspection for an average house in most states will cost at least $500. Contact Lawlab if you’d like a referral to a local inspector.
4. Outgoings adjustments
Adjustments of outgoings often take buyers by surprise. Outgoings are costs that are associated with owning the land – such as council rates, water and sewerage rates and usage, strata levies etc. Outgoings accounts are usually issued quarterly or annually and so if the seller has paid an account for a period that ends after settlement, you will need to reimburse the seller on a pro rata basis. We recommend that you allow for $1,000 to cover these adjustments to avoid any surprises.
5. Banking and registration fees
The funds available at settlement will usually be less than your loan amount as your lender will deduct its fees and expenses of registering the transfer to you and mortgage. Ask your broker or lender for a list of these fees and expenses. In some states the government fee for registering the transfer of title to you is on a scale based on the purchase price and can be significant ($1000+). Contact Lawlab if you’d like more information about the registration fees relevant to your property and state.
6. Mortgage insurance
Have you factored in mortgage insurance? No, this is not insurance to cover you for your mortgage payment. This is an insurance policy that you pay to insure the bank in the event you default in your repayments. It will usually apply if you are borrowing over 80% of the value of the property and the cost is determined on the level of risk. Mortgage insurance maybe incorporated into your loan but always refer to your lender or broker for guidance and information.
7. Moving costs
Worthy of a mention and significant enough for a paragraph of its own, is the cost of moving! When purchasing you will need to consider home insurance, electricity & services connection and removalists costs!
8. The cost of your time and to your wellbeing
Conveyancing can be stressful and time consuming but it doesn’t have to be if you choose the right lawyer. Your time is important so don’t waste it when you can have everything delivered to you digitally on your phone, tablet or computer. Lawlab delivers its service using digital tools that saves you the time from having to visit a lawyer in person and helps manage the conveyancing process from start to finish. Investing in good legal and financial advice will help make sure your first home you purchase isn’t your last!
Contact the team at Lawlab to guide you through your conveyancing journey. We strive to simplify your journey using our modern technology and friendly, knowledgeable staff.