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What is the real cost of buying a property?

Jackie Nevill investigates the epic list of fees and charges when buying a property.

October 26, 2009

You've spent practically every Saturday since Christmas driving from inspection to inspection at break neck speed, braving the crowds in case your dream home happens to be the next one. When you finally find a place to call home you don't want to find you've under-budgeted. So what exactly do you have to pay for when purchasing a home, over and above the hammer price?

Stamp duty
Number one fee to hit your back pocket of course is stamp duty. Each state has different ways of calculating stamp duty and the First Home Owners Grant also provides some relief depending on the value of your home. But as a guide, a $300,000 home in NSW will attract stamp duty of around $10,000.

More upfront fees
Other property fees can include pest and building inspection fees (a pesky one, but worth every cent if you find the walls are about to crumble) – generally around $700, depending on the size of your property.

There's also a registration of ownership transfer fee, legal fees (you need a solicitor to handle the transfer the ownership), utility connection costs, council rates and ongoing maintenance costs (don't forget, when you buy your own house, you can't just “call the landlord to come and fix the leaking toilet”).

Most of us will need to borrow to buy a house, and this incurs a whole new range of fees. Just making the application generally incurs a fee from your lender to cover contracts, property title checks and credit checks.

Then there are the mortgage fees and charges. These usually include a mortgage establishment fee, then fees for the property valuation, registration of the mortgage and if you have to borrow more than 80 percent of the property price, lenders mortgage insurance.

Ongoing fees
If you've bought an apartment, there will most likely be body corporate fees, which can also be quite significant and are usually billed by the quarter-year.

Some home loans also have ongoing fees often called ‘service fees' which are generally included into the comparison rate of your home loan.

It sounds like a long list, so what will all this cost?
According to Ray White Real Estate, prospective home owners should budget to spend around 5-7 percent of the purchase price of the property on fees and charges. On a $300,000 property, this is between $15,000 and $21,000. Suddenly, you could be looking at spending up to $51,000 with a 10 percent deposit.

So, if you want your Saturdays back, make sure you know your real budget – the price you pay for the property is just the start of it.

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