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What are the costs when buying a new home?

You might have saved your deposit and now ready to rip into finding your first home, but are probably wondering what the costs are? Don’t worry we’ve got you covered with our guide on the costs associated with buying a new home.

In short there are 6 major costs to think about when buying a home, and it’s important to discuss these with your mortgage broker or conveyancer before signing a contract to purchase a home.

Stamp Duty

This can be one of the biggest costs involved in buying a property, as a general rule of tumb allow around 4% of the purchase price towards stamp duty. Luckily some states around Australia give stamp duty reductions for first home owners, so check out the stamp duty calculators on most of the state governments websites that factor this in

Registration Fees

These unfortunately are another government fee that can sometimes get overlooked, but it unfortunately will always get charged at settlement! Luckily its fairly small around $200 or so to register the update of name on the properties title as well as registering a new mortgage on the property.

Conveyancer / Legal Fees

A conveyancer or lawyer will help with settling the property, reviewing your purchase contract and basically coordinate getting the cheques from the bank to the vendors. Conveyancing fees will vary and can range as low as $700 up to $1,500 and ultimately depend on the conveyancer or lawyer you choose, as well as the amount of searches you want to conduct on the property.

Lender Fees

Your lender set up fees also vary and ultimately depend on the bank that you go through. They are a fee charged by the bank, or lender to assist with covering the costs of setting up the loan and paying for the documents and can range from $0 to $850. A lot of lenders do waive the set up fees when you set up the loan, so make sure you talk to your mortgage broker and see what they can do here!

Lenders Mortgage Insurance (LMI)

Again another costs that can be quite large depending on how much deposit you put down, and the lender. Lenders Mortgage Insurance is a type of insurance to cover the bank if something goes wrong with your loan and you’re unable to repay, and applies when you have less than a 20% deposit. Some different industry types and professions may be eligible to have LMI waived, like doctors and pharmacists. Chat to us for more details.

lenders mortgage insurance LMI

Lenders Mortgage Insurance (LMI) costs vary greatly between lenders, in the example above based on 2 adults, no kids and a purchase price of $600,000 there is a $5,820 difference between lenders A to G.

As you can see from the image the costs of lenders mortgage insurance can vary significantly between lenders, with this purchase of $600,000 with a 10% deposit there is a difference of $5,820 between lenders A to G, and while this might not seem like much on a $600,000 purchase this amount over 30 years will cost you $27,976 in interest!! So make sure you ask your mortgage broker to compare the lenders mortgage insurance costs, as well as rates and fees.

Building & Pest Reports

A building and pest report is conducted by a qualified professional, sometimes they are former builders who inspect the property you are wanting to purchase and check out if there are any building issues or defects. They can also look for pests like termites, white ants and rats to make sure your new home doesn’t have any nasty surprises waiting for you! A building and pest report generally costs between $400 to $600.

It’s important to keep all of these costs in mind when buying a home because unfortunately just having your 5% or 10% deposit towards the house isn’t always enough!

fees for home loan

Potential fees for home loans include stamp duty, transfer duty, legal fees and lenders mortgage insurance (LMI).

Help this is all confusing

If you are a first home buyer speak with one of our experienced mortgage brokers to walk through the next steps with you.

At Hunter Galloway we help first home buyers get ahead in this competitive market, we give you the actual strategies that have helped other first home buyers like you secure a property when there have been 5 other offers on the table! Enquire online or give us a call on 1300 088 065

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