First Home Buyer's Guide
Purchase costs explained
Costs vary depending on the type of property and whether it’s new, existing or you are building it.
Lender’s Mortgage Insurance
An insurance policy which protects the lender from your default (not you). This figure is a once-off premium payable up front and in most cases can be added on top of your loan (up to a maximum level - typically 95% of 97% loan-to-value ratio).
This is the transfer duty payable to the state or territory you are buying in. Unless you are eligible for an exemption this is often the largest purchase cost.
Exemptions are available in most states for new property or vacant land and some states also offer exemptions
Unless you’re a lawyer yourself (and often even then) a solicitor or conveyancer is best to use to represent you in the transaction. The solicitor or conveyancer will assist you to negotiate terms in the contract and assist in affecting the settlement for you.
Which is best for you is a contentious issue, but usually a conveyancer is cheaper however only a solicitor is qualified to help you should things go really wrong.
Property inspections & enquiries
This is completely property dependent. The usual searches include:
Pest & Building
This is critically important to ensure that the building is structural sound and that termites haven’t eaten away at the frame.
Searches uncover whether there have been any building issues and whether there is sufficient funds in the sinking fund in order to cover future repairs and maintenance.
Electrical or plumbing inspection
These may be needed in rare cases where issues are identified by the pest and building.
You may also see the need to ascertain whether improvements and add-ons are in fact council approved. The last thing you want is to find out that you have to tear down the carport because your predecessors never obtained council authority.
Lenders typically charge an application fee or annual fee (payable up front). They may also pass on their legal and valuation expenses to you.
Registration of mortgage and title transfer fees typically apply. Usually in the hundreds of dollars.
Pro tip: new home buyers typically have lower purchase costs and attract government grants.