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The Full Cost of Buying a Home: What hidden expenses have you forgotten?

It’s the great Australian dream to own your own home. However hidden costs may just stop your dream from becoming a reality.

Buying your own home is likely to be the biggest financial commitment you’ll ever make. It is important to be aware of the smaller costs which may catch unsuspecting homebuyers out. Remember that most of these expenses are paid before or around the time of the property settlement, so your savings or loan will need to cover these amounts as well.

Here are some of the hidden expenses (on a home worth $500,000) you might not be aware of;

• Loan Application Fees – up to $1,000 depending on loan

• Valuation Fee – assesses the value of your property, can be up to $300

• Mortgage Stamp Duty – varies depending on loan amount, and state you are in, approx. $2,000

• Lenders Mortgage Insurance – required if your deposit is less than 20%, a typical fee with a 5% deposit is approx. $10,000

• Contract Stamp Duty – calculated on sliding scale based on the purchase price and whether the property is investment or owner-occupier, approx. $18,000

• Deposit – usually 10%, this amounts to $50,000

• Conveyancing/Solicitor fees – they are required to assist with the legal documentation, arranging property searches and transferring ownership. Fees, including searches, can range from $1,000 to $2000 depending on who you choose

• Building Inspections – approximately $275 - $500

• Pest Inspections – ranges from $150 - $300

• Body Corporate Searches – for units or properties within a complex, approx. $165 - $250

• Home and contents insurance – the cost will vary depending on the location, value, size, age and construction

• Council rates, water rate and strata levies – adjusted if the rates are paid in full for the current year and quarter

• Electricity, gas and telephone – will all need to be reconnected into your own name, costs approx. $80 - $100 per facility

• Removalist’s costs – will vary depending on where you’re moving, how far away it is, amount of furniture and whether you do the packing. Prices can range from $600 - $3,000

Don’t be one of those people who fall into the trap of not understanding the various costs involved in purchasing a property. You could be potentially caught up to $40,000 short. Do your homework and be prepared to save a little extra for all those hidden costs.