You’re thinking about making the biggest commitment of your life so far. No, we’re not talking about getting married, it’s that other big decision in your life – buying a property! You might have been saving in your Dollarmites account since you were 10 years old or you turned 18 and realised you better start putting some cash away rather than throwing it on the bar every Friday, Saturday, and sometimes Sunday night… Now you think you’ve saved enough cash and Coles Myer vouchers to put together a deposit on a unit or townhouse – but do you?
How much cash do you need to buy a place? What deposit do you need? How long does it need to stay in your bank account and what other costs are there? Don’t worry, we have you covered in our guide showing the 5 big things you will need to contribute to buying a home.
Deposit – 5% Minimum
When we’re talking about borrowing to buy your first home, the more deposit the better! However, how many people realistically have a six figure bank account at 21? Not many unless your Mum’s name is Gina, then you’ll have a few billion tucked away. At the moment you can still get away with having a 5% deposit, but unless you have more than 20%, you usually need to pay Lenders Mortgage Insurance. This can sometimes be added to the loan, but that’s a topic for another day.
Stamp duty – $0 under $500,000 for first home buyers!
As a first home buyer, you have stamp duty waived on your first purchase if the property is worth less than $500,000. Any amount higher than this and you’ll be paying stamp duty. It will be reduced but you have to pay it nonetheless. If you aren’t a first home buyer in Queensland, you still get stamp duty concessions if you are buying a home to live in; whereas if you are buying for investment purposes, you pay full freight.
Government & Bank fees – Budget for around $400-500
Wait… Isn’t stamp duty the only government fee?! No, sorry. There are some government and statutory charges that you will need to pay upon settlement which you need to remember. Your Mortgage Broker or Banker should take you through this.
Professional fees – Budget for around $2000 to $3000
So buying a house involves a lot of people, much more than you will realise until you get into the thick of it. Don’t forget: people are buying and selling properties daily, so it is actually a fairly easy process if you have the right team around you supporting you. These include –
- Solicitor / Conveyancer – $1,000 to $2,000 including searches
- Building & Pest report – $400 to $500
- Valuer – Generally the bank will cover this cost
- Mortgage Broker – Generally free as brokers are paid by the banks, not their clients
Other fees and costs – Anything between $0 to Infinity
- Moving fees – How long is a piece of string? This depends on where you’re moving from and to, and how much stuff you have. You can hire a ute for around $70 an hour. Otherwise, removalists charge between $100-200 per hour depending on how many people they need, the size of the truck etc.
- Furniture – Hopefully Mum and Dad won’t mind a few missing beds, couches and TVs. If not, Ikea will become your new best friend.
- Electricity – That thing that people always forget until they move in and realise they can’t charge their iPhone. If the power has been disconnected, it can sometimes take between 2-3 weeks to get it reconnected. Our friends at Energex don’t like to do things in a hurry so this is a good thing to remember.
- Insurance – Banks will require you to have Home & Contents insurance if you are buying a house to protect you (and them) from it burning down, being flooded, and all sorts of nasty things – this might cost between $1000 to $3000 per year depending how much the house costs to replace, the area and about a million other things that they work out in the background. If you are buying an apartment, the Strata or Body Corporate generally have a group policy to cover the block of units in case they burn down, but it is still worth thinking about getting a policy to cover your contents.
- Foxtel, Internet – Like Energex, our friends at Telstra and Optus don’t like to be rushed and can take their sweet time on this. Make sure you’re organised and talk to them well in advance.
So that’s that. Hopefully, now you have a bit of an idea on what it costs to buy a place.
If you want some further details, get in touch with Shoheel Khan on 0418 110 870 so we can assess your situation, give you some specific figures and answer your questions.