When buying a home, there are some costs you expect and some you don’t. It’s easy to get caught up in property prices, interest rates and saving your deposit. But there are some other costs associated with buying a property. To help you avoid any surprises we’ve put together a list of things you might need to think about when working out your budget.
Not all of the following costs apply to everyone and every situation —so it’s important to consider what ones might affect you.
For First Homebuyers there are some options available to assist you in the purchase of your first home:
If you are struggling to save the deposit for a home a family guarantee allows you to use a guarantee from a family member, such as your parents, as equity to assist with your home purchase. This is usually supported by a mortgage over their property or a term deposit.
Deposit Protect Bond
The Deposit Protect Bond allows you to go ahead with a property purchase before you actually have the cash deposit available. It is particularly useful to those who have their cash tied up in other investments and can be used at multiple auctions or by private treaty.
First Home Owner Grant (FHOG)
If you are buying or building your first home you may be eligible to apply for the state’s First Home Owner Grant (FHOG) which is fully funded by the WA state government. First introduced to offset the higher housing costs advocated with the introduction of GST, the grant allows first home owners purchasing or building a new home to be eligible to receive a grant of $10,000. For first home owners purchasing an established home, you may be eligible for a $3,000 grant.
Stamp Duty Concession
1. If the property includes a home:
i. $0 - $430,000 purchase price = $0
ii. $430,001 - $530,000 purchase price = $19.19 per $100 or part of $100 above $430,000
2. For vacant land:
i. $0 - $300,000 purchase price = $0
ii. $300,000 - $400,000 purchase price = $13.01 per $100 or part of $100 above $300,000
Home Buyers Assistance Account
This scheme provides a grant of up to $2,000 for the incidental expenses of first home buyers when they purchase an established or partially built home through a licensed real estate agent for the purchase price of $400,000 or less. The grant can be used for - mortgage registration fees, solicitor and/or conveyancing fees, valuation fees, inspection fees, establishment fees, mortgage insurance premiums and lending institution fees associated with lodging the application.
• Conveyancing and legal costs.
• Pest and building inspections which are approximately $500.
• Moving costs ranging from $50 an hour.
• The “unknown” costs which account for minor renovations or home improvements you may want to make such as painting, to make your place feel like home. You may even need to purchase new furniture to match your new home.
Minimum Deposit for a Home Loan
The biggest hurdle to overcome when purchasing a home is getting your deposit together. Typically you are encouraged to save approximately five per cent of the purchase price before you start looking at homes for purchase. Ideally though, you should aim to save somewhere between 5-20 per cent of the purchase price to aid you with your repayments.
Lenders Mortgage Insurance
This insurance allows banks to lend a greater percentage of the purchase price to consumers. This can be paid back to the bank in your loan repayments, spread throughout the term of the loan, or as an upfront payment. However, if you manage to save more than 20 percent or have a guarantor you will be exempt from Lenders Mortgage Insurance.
There a range of bank fees applicable to home loan borrowers, differing between bank providers. Usually they compromise of an application fee, a monthly service fee and a facility fee, if applicable to your property. Please enquire with your bank for current fees associated with their service.
Government fees are often confused with bank fees as they are paid to and collected by the bank on behalf of the government. These fees often include stamp duty on a mortgage, stamp duty on the transfer of land and other Titles Office charges.
Insurance for the property
Before settlement, your bank will require a copy of your property’s building insurance. If you are purchasing a green title home you must take out insurance of your own. If you are purchasing a strata property, insurance is typically included in strata levy fees or billed separately, so you will need to request a copy of the ‘Certificate of Currency’ from the strata company to provide your bank.
Post settlement, you will need to consider investing in appropriate contents insurance for when you move into the property to protect your belongings.
A Peard Finance broker is available for an obligation free review of your finance options and to discuss in further detail the above steps and associated costs. Contact:
P: (08) 92738955
Transfer of property
Settlement is the most important and final stage in the sale of a property, requiring all the general and special conditions of the Offer and Acceptance to be satisfied. At settlement, the balance of the purchase price for the property is paid and the legal title to the property is transferred from seller to buyer. In Western Australia, a settlement agent or solicitor is required to conduct these settlement processes.
When buying a property there are a number of fees over the purchase price associated with the settlement process. Your chosen settlement agent will provide you with a statement outlining the total for each of these items:
Settlement Agent Fees
a. Settlement Fee*
b. Enquiry Fees
Settlement agents will contact Landgate, the Water Corporation, your local Council and the Office of State Revenue, to advise them of a change in property ownership.
- Registration costs
- Title Search fees
- Photocopies, faxes and postage
Transfer Duty on the Contract (Stamp Duty)*
Transfer duty, which was formerly known as Stamp Duty, must be paid on all dutiable transactions for property throughout WA. It is calculated via the value of the property or the consideration paid. Transfer duty also offers special rates for residential properties, first home buyers or those applicable to a concessional rate.
Registration of the Transfer (Transfer Fee)*
There is a cost associated with registering a deed, a mortgage or any other document that affects the title to land.
Adjustment of Rates/Taxes
a. Water Rates
b. Shire Rates
c. Land Tax (if applicable)
d. Strata Levies (if applicable)
* For a more accurate price estimate, download the free Evolutions Settlements App from iTunes which can calculate these figures for your specific circumstances. Alternatively, contact:
P: (08) 9273 8977