There’s more to buying a house in Melbourne than just paying the property’s price as advertised. You have to prepare for hidden costs that you will also have to factor into your overall budget when purchasing a property.
The actual property value and the property’s location will determine how much each hidden cost will be. Below are the usual additional expenses you should expect and include in your budget.
Solicitor/conveyancer fees. You will need to have all your legal bases covered, and the best way to ensure this is to hire a solicitor or conveyancer to take care of all the nitty-gritty legalities of your purchase. Paying for legal fees is not an absolute must, but it is a wise move as you will definitely get your money’s worth.
Loan application fee. If you are going to purchase a property through a loan, you will have to pay a loan application fee to set the process in motion. The actual fee is determined by how much loan you need and the lending party. There are lenders who waive this fee, so “shop around” first.
Mortgage insurance. This comes with a loan application. A lender would require mortgage insurance if your down payment on the property is less than 20% of the property’s purchase price. You’ll pay a higher insurance fee the smaller the down payment. This is typically added onto your monthly mortgage payments. Being able to purchase a home with as little as a 5% deposit usually makes the added cost of a mortgage insurance worth it.
Building and pest inspection costs. Pre-purchase building and pest inspections are not something you should try to avoid. Every house, new, semi-new, or old, always has a problem, and only the expert eyes of professional and experienced inspectors will know how and where to look. Without a proper building and pest inspection, you may end up spending so much more to fix unexpected problems which the seller could have covered if you requested for this to be stipulated in your contract
Mortgage registration and title transfer fees. As the buyer, you will pay for the costs of mortgage registration and title transfer. The exact rates will depend on which state the property is located.
Stamp duty. If you’re a first-time home buyer, some states will exempt you from paying stamp duty. The actual cost will depend on the property value and its location.
Council and utility fees. These are typically paid by vendors on a quarterly basis. You may have to pay the vendor for part of that quarter’s rates when you purchase a house.
If you’re planning to purchase a house, you should do your research and learn more about the hidden costs – what they are and how much – so you’ll be better prepared budget-wise.