Saving up a deposit and breaking into the property market is a big achievement. But remember that additional fees and costs can add another 5-7% to the purchase price.
Stamp Duty
This is the state government tax on mortgage documents and the property price itself. Rates vary from state to state, and if it's your first home you may be exempt from Stamp Duty or entitled to a rebate or concession.
Conveyancing
The legal transfer of property title from one person to another. There will also be other fees, including a title search to verify ownership and type of property.
Mortgage Insurance
You'll incur this if you borrow more than 75-80% of the property's value. It covers the lender's costs if you fail to comply with the terms of your loan agreement or mortgage.
Building Insurance
This should be in place as soon as contracts are exchanged, including for contents if you are an owner-occupier. Responsibilities vary from state to state, but it needs to be activated at the time of settlement for some lenders to advance the funds.
Goods and Services Tax
This applies not to the sale and purchase of residential properties, but the supply of them. GST will be charged with:
- New house and land packages
- Your real estate agent's selling commission
- Conveyancing and solicitor's fees
- Valuation fees
- Your moving costs
Hidden extras
Strata titles
These make allowances for the costs of shared maintenance, including body corporate fees.
True value
An independent valuation to make sure you're not paying over the property's true value.
Moving costs
Shopping around for these can save you hundreds and sometimes thousands of dollars.
Building and pest inspection costs
You may need to organise this to identify pest damage or infestation in the property
Bridging Finance
Bridging the financial gap between selling one home and buying another needn't be a complicated process. You usually have two options:
Bridging Loan
This is a short term loan to cover the gap. Lenders will usually allow a six-month term for you to sell, and up to a year if you're building a new place. In most cases it will be offered at the standard variable rate.
Deposit Bond / Bank Guarantee
A cost-effective alternative to putting down a 10% property deposit. If you can satisfy the lender that you have the deposit in shares or bank accounts, you won't have to lay your hands on the cash right away.
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