In this article
- The upfront costs involved when buying a house and the potential hidden expenses involved when purchasing in Southern Tasmania.
Transparency is key: Let's face it, nobody enjoys the surprise of unexpected, hefty financial burdens when venturing into homeownership, whether it's your first or second time around. This article sheds light on the common upfront costs involved in purchasing a house or investment property so you can start planning and saving accordingly. By being aware of these potential expenses, you can better prepare for your dream home journey and ensure a smoother path towards securing your own house deposit.
Remember that purchasing a home entails various factors, making it crucial to conduct your own research and seek guidance from the appropriate professionals, whether you're buying your first home or your tenth.
What are the upfront costs when buying a house?
The highest upfront cost when buying a house is the deposit you will need to give the lender in order for your mortgage to be approved so you can purchase the property.
How much you will need to save for a deposit will depend upon these five aspects:
- The total cost of the house sale price and the upfront costs
- Your total income per year
- Your total expenses per year
- The particular lender you choose
- If you need and have a guarantor
- Whether you are happy to pay the Lenders Mortgage Insurance (LMI)
Lenders Mortgage Insurance (LMI)
A potential hidden expense you might avoid is Lenders Mortgage Insurance (LMI), which typically applies if you've borrowed over 80% of the property's value. This insurance safeguards the lender (the bank) in case you, as the borrower, cannot meet your home loan repayments.
Building inspections
It is highly recommended that buyers organise a building inspection or any other relevant inspections when purchasing a home.
A building inspection will give you, as the buyer, peace of mind about the property's structural integrity or provide insight into any renovations or maintenance you might need to undertake after purchasing the property.
Home, building and contents insurance
You will want to ensure you have building and contents insurance for the property you purchase before the settlement date. Having the insurance before settlement will ensure that you are covered right from the start in the event of damage to the property.
Stamp duty
Stamp duty is a transfer duty charged by the Tasmanian government on property purchases, meaning the transfer of a property title from the seller to the buyer.
In Tasmania, the stamp duty cost is determined by either the purchase price or the property valuation - whichever figure is the most.
For first homebuyers, remember to check whether you are eligible for the First Home Owner Grant, which can assist with paying for stamp duty costs.
Mortgage registration fee
Another upfront cost when buying a house is registering your property to ensure that no one else has a claim on the existing property and that you are now the new owner. If this is not your first property purchase, you must also pay the discharge fee to sell your property.
Legal and conveyance fees
You will want to employ a conveyancer or solicitor to assist you with legally transferring the property. The cost of legal fees varies, depending on the time they spend on your case and the number of preparation documents and checks needed.
Connecting gas, electricity and telecommunications
You will need to pay a reconnecting fee to turn your gas, electricity and telecommunications back on once you move into your property.
Moving Costs
Considering the costs involved in moving to the new property would benefit you. However, if you are on a budget and have family and friends to help, you can keep the expenses low.
You will want to decide whether to pay a removalist or use your friends and family's trucks, utes, and cars.
You can purchase packing supplies such as boxes, tape, labels and bubble wrap, or you can start collecting these items from friends, family and local shops.
With a new property comes new bills! If you have previously rented, you will have some extra costs to consider once you have purchased your own house. If you have previously owned your home, the bills may differ depending on your property's size and location.
Bills you will need to pay:
- Water and sewage
- Council rates
- Garden and home maintenance
- Rubbish and recycling
On average, the upfront costs when buying a house are estimated to be between 7 and 11% of the total purchase price. Therefore, an $800 000 purchase price could have upfront costs of $60 000+ on top of the required deposit.
Are you struggling to save for your house deposit and all the upfront costs when buying a house? Click here to read our 30 top creative tips to tighten your spending so you can work towards buying your next home faster!
Are you ready to start looking for your first or next home?
Looking for a property in Southern Tasmania?
Contact Fall Real Estate today to get in touch with one of our professional and helpful sales agents! They are equipped to assist you in finding your dream property within your comfortable budget range!
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