13 Extra Costs To Be Aware Of Before Buying A Property
13 Extra Costs To Be Aware Of Before Buying A Property
13 Extra Costs To Be Aware Of Before Buying A Property
Our promise to you Since 1988 we have strived to provide the very best real estate service in Sydney to the many property buyers, sellers, investors and tenants who call on us for help and advice each week. This booklet and the advice it contains is part of that promise. We hope you enjoy the content and profit from the experience. Remember, our offices are open 7 days a week to help you with any real estate matter so be sure to call us if you think we can help. You'll find contact details for your nearest Prudential Real Estate office on the back page of this booklet.
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13 Extra Costs To Be Aware Of Before Buying A Property
Congratulations !
YOU'VE SAVED a large enough deposit to buy your first home. You've even arranged a mortgage after shopping around for the best deal. And you've found a solicitor or conveyancing company who'll do a great deal on costs for you. You've covered all your bases . . . or so you think. There are lots of costs to consider when you buy a home. Many of them you won't discover until it's too late. You'll be in the middle of the purchase transaction and your solicitor, your conveyancer or your bank will say "Oh, by the way, you'll need a so and so, and that'll be another $150.00" All those incidental costs can add up quickly. So, before you begin your journey towards property ownership take note of the following list of hidden costs that you might encounter along the way. T a ke t h e m to yo u r S o l i c i to r, yo u r Conveyancer and your Bank and ensure they tell you whether you'll be subject to any of these costs - before you get started. After all, awareness usually prevents loss.
13 Extra Costs To Be Aware Of Before Buying A Property Here's some extra costs you may not have considered . . . (in alphabetical order) with the approximate cost shown in the far right column.
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Bank Fees
Bank fees are almost insidious. They creep into every transaction we undertake these days. If you are withdrawing or depositing money you can be certain you'll attract Bank fees. In this instance you'll also pay when your solicitor / conveyancer deposits or withdraws money on your behalf and you'll pay when your bank deposits or withdraws money on your behalf. Various Up to $250.00 in total
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Building Inspection
Many motor vehicle buyers wouldn't consider the purchase of a second-hand car without a mechanical inspection to check on the road worthiness of the vehicle. In the same fashion it makes good sense to have a professional look at the home you are about to buy to check on all those hidden issues you can't always see. This may be an extra cost but its money well spent. $200.00 to $400.00
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13 Extra Costs To Be Aware Of Before Buying A Property
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Council Rates / Water Rates
If the owner of the property you are about to buy has paid his or her local Council Rates or Water Rates in advance you will be expected to reimburse these fees to them on settlement. Your solicitor / conveyancer will calculate the extra costs you are to pay and arrange payment. These days rates of both types are usually paid quarterly so the most you would be expected to reimburse would usually be no more than 3 months worth of Council and / or Water rates. Various
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Mortgage Application Fee
When you apply for a mortgage with a bank or lending institution you will generally be charged this fee. In most cases these days the Mortgage A p p l i c at i o n Fe e a l s o i n c l u d e s o n e property valuation that is often worth (over) $300.00 by itself. The balance of the fee offsets the banks costs of reviewing your application. $200.00 up to $600.00 (sometimes “no cost�)
13 Extra Costs To Be Aware Of Before Buying A Property
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Mortgage Insurance
If you are borrowing more than 80% of the value of the property you can expect to pay Mortgage Insurance. This is the way the bank offsets its risk – by insuring the home loan its about to give you against default. Unlike other insurance the beneficiary (the bank) doesn't pay – you do ! And it can be expensive. If you were buying a $400,000 home and you were borrowing 95% of the purchase price the Insurance premium you'd be expected to pay would be $6650.00 – pretty expensive ! From 1% up to 1.75% of the purchase price for a 95% loan
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Pest Inspection
For the same reasons you wouldn't buy a property without a building inspection you certainly wouldn't buy without a pest inspection – even if the property is brand new. Termites are a ever-present problem and they can do a great deal of damage in a very short period of time. So take warning – this is an essential cost and well worth the investment. $170.00 to $300.00
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13 Extra Costs To Be Aware Of Before Buying A Property
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Mortgagees Search Fees / Settlement Fees / Bank Cheque Fees
When you borrow money from a bank for a mortgage the bank has to check on both you and the property you are hoping to buy – these are called searches and they'll cost you (not the bank) about $50.00. On the day of settlement an agent of the bank has to turn up to hand over the cheque (the money you've borrowed) to the vendor's solicitor. The fee for this service is usually $50.00. If you require several cheques to be handed over on settlement for different amounts you have to pay for each cheque – often $10.00 each. $50.00 $50.00 and $10.00 respectively
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Photocopying Stamps Phone Calls, etc
Almost all solicitors and many conveyancers charge a fee or fees that cover all these miscellaneous charges. All up you could be looking at $50.00 or more. Up to $75.00
13 Extra Costs To Be Aware Of Before Buying A Property
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Removalist / Hire Ute
Somehow you have to transport both you and your belongings to your new home on the day of settlement. Some people get a removalist and others get their mates and hire a utility. Either way there will probably be a cost and you should allow for that cost before it occurs. Various
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Stamp Duty on the Mortgage
This duty is in the process of being abolished by the NSW State Government but until 2009 you could be liable. Check with your solicitor or conveyancer. Of course, if you are paying cash for your property this duty won't apply. $1141.00 on a $300,000 mortgage
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13 Extra Costs To Be Aware Of Before Buying A Property
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Strata Search
A home unit, villa or townhouse is usually administered by a Body Corporate. In order to pay for the running of the Body Corporate and the maintenance of the common property each owner in the complex pays quarterly strata fees. This search uncovers how much money has been collected and how wisely it has been spent. On occasion this search will uncover the fact that a special levy has been struck to pay for some major work at the complex. Such a levy may make you re-think your decision to purchase. $180.00 to $250.00
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Survey
These days the bank you are borrowing from usually requires a survey. If, however, the owner of the property you are purchasing has an existing survey of their property and no changes have been made to the property since the date of the survey you might be able to obtain a copy from the owner. This will usually satisfy your bank and you will save yourself the cost of a new survey. $300.00
13 Extra Costs To Be Aware Of Before Buying A Property
Number 13
Its true there's lots of hidden costs involved in the process of buying a property – but unexpected expenses don't stop with the contract, the bank and the solicitor. When you move into your new home there are a couple of other things to consider. What about . . . • C h a n g e d / va r i e d / i n c re a s e d transport cost from your new home to work. • GST on everything involved in the process of buying a property (except bank costs) • Building Insurance as well as contents insurance. • Now that you're the owner you have to pay the cost of repairs / renovation • Now that you're the owner you have to pay council rates, water rates and strata fees. • Rubbish removal / cleaning costs prior to moving in to your new home. • Buying new furniture for the new house (if the old furniture won't fit or match) But don't despair – think about the millions who have been through the home buying process before you. They didn't have the advantage of this inside information. They simply coped with these extra costs as they occurred. Now, because you are aware of these extra costs, you can budget and allow for them. And at the end of the process you'll have a new home and a balanced bank account.
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13 Extra Costs To Be Aware Of Before Buying A Property
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Recipients of this report are reminded that, although due care has been taken in the preparation of the within contained material, prospective property buyers, sellers and investors are always best served by making their own independent inquiries before entering into any real estate transaction. This report has been prepared for the sole and exclusive use of Prudential Real Estate clients and customers. The whole of the contents and design are protected by copyright. COPYRIGHT Š Michael O'Sullivan 2001-2015
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