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PPG_Blog_nov_image 3_other costs when buying home

Property buyers, especially those looking to purchase for the first time, will need to be aware of the many costs associated with buying a home. Budgeting well in advance is essential and helps prevent any sticky situations at settlement time. After all, you want to have as much as possible available for the actual property!

If you are a first home owner you may be entitled to receive one or more of the following:

  • First Home Owner Grant (the Grant),
  • First Home Bonus (the Bonus),
  • First Home Owner Boost (the Boost),
  • A regional bonus,
  • A reduction of duty for eligible first home buyers.

Borrowing costs

Before beginning the search for a new home, you should ascertain how much you can afford to borrow then obtain loan pre-approval from the bank. When combined with your savings, the amount you borrow has to cover more than just the cost of the property, such as the loan establishment fee, mortgage insurance and stamp duty.

Fees will vary from lender to lender, so be prepared to shop around for the best loan to suit your needs.

Stamp duty

In Victoria, stamp duty on a property can be as high as six per cent depending on the value of the property. Cuts to stamp duty rates for first home buyers are being phased in over the next few years, so it is important to use calculators located on the state revenue office website.

Valuation report

It may be worthwhile obtaining an independent valuation report on a property to indicate its current market value. The valuation must be conducted by a Certified Practising Valuer.

Legal costs

There are a handful of legal costs involved in a property transfer:

  • Conveyancing—You need a professional to legally transfer ownership of the property you are buying or selling. The services of a conveyancer or legal rep generally cost from around $1,000.
  • Searches—Your legal rep will need to perform property and title searches to be sure that the seller is legally entitled to sell the property. If you’re moving into a strata property, then your legal rep will probably arrange a strata inspection and a check of the strata body corporate records.

Building and pest inspection reports

Undertaking such a report may save you thousands of dollars in the future and will highlight the need to undertake work on the property and possibly make allowances in your budget for it. A combined report may cost around $400.

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