Invest Conveyancing

Property Purchase Costs: How to Prepare

Posted on October 3rd, 2014

Buying a property can be one of the most exciting moments in your life.

When buying a property we are usually prepared with our financial details and a sizeable deposit. You may even have arranged pre-approval through your Lending Institute before you start your search.

Something that you may not be aware are the additional costs associated with your property purchase which many of us are not prepared for.

With any property transaction, there are a number of professionals that you engage with that have of course associated costs.

Here are some examples of these costs:

Transfer Duty

Transfer duty is a general revenue imposed by your State Government that must be paid on dutiable transactions for property. This varies between states and the type of property purchased, and may be reduced by government grants.As a broad example, the Duty payable on a residential property in Western Australia with a consideration of $460,000.00 is $17,765.00. Being eligible for the First Home Owner Grant significantly reduced the rate of duty payable. There is an eligibility criteria that the Applicant must meet to qualify for the Grant.

Lenders Mortgage Insurance

This protects the lender in the unfortunate event that you default on your home loan. This will vary due to the structure of your loan and your deposit. Fees range considerably, so allow 3% of your loan amount. Generally speaking, Your Lending Institute will require you to obtain LMI if you are borrowing greater than 80% of the value of the property.

Settlement costs

Expenses during the settlement of the property, these include adjustment of rates and taxes, enquiry charges to the Local Authority and other government bodies and searches of the Certificate of Title and encumbrances amongst others

Conveyancing Fees

The cost for Conveyancing Services is currently regulated and based on the purchase price.

Mortgage Application fees

This will cover the preparation of the loan and supporting documents, valuations and searches by your financial institute. Fees range up to $2,000.

Building Inspection Report

This is a written account of the property that will give you an indication of any significant defects or problems. Fees range from $300-$900 plus, depending on services.

There are a number of other fees that you may have to cover that can quickly add up. These include utility connections, home and contents (or landlord) insurance and moving services. Some of these can be incorporated into your mortgage, but others will need to be paid in advance.

As a guide, be prepared to put aside 10% of the purchase price to cover the costs involved in buying your property. It is always better to be over prepared than trying to cover the shortfall of property expenses.


Comments are closed.

Mike

Hi Fran,
Just a quick note to say Deb and I were very impressed with your timeliness and efficiency during the settlement of our recent purchase in Trigg. Thanks for making the whole process trouble free!
Cheers

Jay & Kerry

Thank you and your team for making our settlement process for purchase of a property in South Hedland, an easy experience, despite the fact we are located in Melbourne. We are “first time interstate buyers” and were a little apprehensive as to what and how to do things in a different state from here in Victoria. All investment properties we have had over the years have all been in Victoria, so it was great that all details of the settlement in South Hedland went smoothly and all via internet/phone. Once again, thank you for a great service from Invest Conveyancing.