The 12 Key Costs of Buying Property in Australia
Are you thinking of buying a property in Australia? It pays to be aware of all the costs that come with it. In this video, Shehan goes through the 12 costs of buying a property in Australia that you must keep in mind.
- Property price: The first and the easiest one is obviously you have to pay the price for the property. Generally, there's a deposit that happens straightaway when you sign your contract, and the second one is on the day of settlement, you have to pay the rest.
- Stamp duty: The second item that is the biggest cost is generally stamp duty. Stamp duty is a cost paid to the government to help transfer the property into your name. Stamp duty ranges between two to six percent in Australia, depending on the state, and can catch a lot of people out because it is a big, big figure.
- Land transfer fees: Included in stamp duty or sometimes exclude is a thing called land transfer fees. That is again a little government fee to help move the property into your name. Sometimes you can see stamp duty and land transfer bundled together, and it's just government fees.
- Bank fees: Now generally in Australia, if you're buying a property, most people will need to go get a loan. Each bank has different fees and charges associated with that loan from a very simple annual fee to a transaction account fee all the way to risk fees, capitalized interest fees and all these quirky items. But your bank fee is generally payable on the day of settlement.
- Mortgage registration: Mortgage registration is usually $300 in Victoria and can scale up against other states. And it's a small fee to stamp and registered the mortgage as yours.
- Legal fees (bank legal fees): There are two types of legal fees. Bank legal fees are for a bank to prepare loan contracts. Your loan contracts are prepared by a bank to enable them to hand money over to you. Sometimes fees and charges depending on the type of bank.
- Legal fees (conveyancer): The second type of legal fee is to protect you. This is when you use a conveyancer or solicitor to help you review contracts along the journey. A conveyancer costs can sit between 800 to 1300 in Australia, and a solicitor can cost a little bit more on top.
- Building and pest inspections: Building and pest inspections are really important, as they can help identify any issues with the property that may not be immediately apparent. These inspections can cost between $500 to $1000, but they can save you a lot of money in the long run.
- Lender's mortgage insurance: If you have a deposit that is less than 20% of the property price, you will need to pay lender's mortgage insurance. Lender's mortgage insurance is a one-off payment, and the cost can vary depending on the lender and the size of your deposit.
- Property valuation: Your lender will require a property valuation before they will approve your loan. This is to make sure that the property is worth the amount that you are paying for it. The cost of a property valuation can vary, but it's generally between $300 to $500.
- Moving costs: Moving costs can vary depending on how far you are moving and how much stuff you have. You may need to hire a removalist or rent a truck, and you may need to pay for packing materials.
- Maintenance and Renovation Costs - This cost varies depending on the property's age and condition. It is essential to keep some cash aside for any maintenance and renovation costs that may arise.
These are the 12 costs that you must consider when buying a property in Australia. It is important to understand each and every one of them because buying a property is an expensive affair, and you don't want to be left holding the bag right before the settlement day.