REGARDLESS of whether you are buying solo, with a friend, relative or partner, there are some general costs you need to be aware of and properly budget for when looking to enter the property market.
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Firstly, when buying a home, you will need to conduct pre-purchase inspections like pest and building inspections to make sure the property you plan to purchase is structurally sound.
If you are buying an apartment, a strata search will provide information on any levies, insurance details, disputes, history of repairs and anything else you may need to know.
There are also various borrowing costs that you will need to factor into your calculations when saving to buy property.
Often, these costs will come out of your deposit, so it is important that you take this into consideration when building your deposit.
Some of these borrowing costs will include your loan application fee, the lender's property valuation fee, as well as any Lenders Mortgage Insurance that might be payable. This insurance protects the lender if you default on your loan and is only payable if you are borrowing 80 per cent or more of the value of the property.
When buying a property there are also various government charges that you may be required to pay, including stamp duty, property transfer fees and mortgage registration fees.
While your property transfer fee and mortgage registration fee are usually minimal in terms of costs, stamp duty can often cost thousands of dollars.
In a nutshell, stamp duty is a government tax that you have to pay when you buy a home.
The price of stamp duty is calculated on the price you paid for the property.
Some states have various stamp duty concessions in place, so it pays to speak with a mortgage broker to see what concessions, if any, you are entitled to.
Finally, a major cost that new home buyers don't often consider is insurance.
There are insurances that you should have, including home and contents insurance, mortgage protection and income protection.
Failure to have any of these could prove very costly down the track.
The more money that you have to contribute towards the purchase of your property and associated costs, the better off you'll be in the long run.
■ Richard Windeyer is a mortgage broker with Mortgage Choice. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Phone: Richard Windeyer on 1800 01 LOAN.
