Homebuyers beware - hidden costs exposed and explained

Yahoo!7 Moneyhound February 8, 2012, 9:04 am

When it comes to buying new property often homebuyers will often forget to consider all the costs involved – and unfortunately, forgetting just one can mean big bucks!

There are literally dozens of costs and expenses associated with buying a home that need to be factored in beforehand.

Here’s a list of things to consider when figuring how much you really have to spend on a house:

Home loan application fees

The entry fee covers the initial costs associated with processing a loan application. While it ranges between lenders, most lenders charge up to $600 and this covers credit checks and legal contracts.

Monthly maintenance fees

These are basically monthly account-keeping fees and usually run in at up to $15 per month. Over 20 years that adds up to $3,600. In today’s competitive mortgage market you can usually find a home loan that waves maintenance fees.

More from Moneyhound: Mortgage reduction tactics

Conveyance/legal fees

This covers the cost of transferring legal ownership of the property. Almost everyone cannot buy a property without legal aid or a conveyancer and their fees can range from $1,000 to $4,000.

Valuation fees

The property is valued by the lender in order to ensure that the security is sufficient to cover the debt position. Expect to pay $150 to $300 for valuation fees. The lender will often charge this as part of the application fee, so make sure you find out.

Mortgage registration

This is the cost of having your mortgage deed registered with the government at the Land Titles Office and usually runs at about $100.

Stamp duty

A well-known government fee (like a tax) that can be quite expensive depending on the purchase price of the property. Be sure to check online as there are dozens of stamp duty calculators around like www.stampdutycalculator.com.au . A $300,000 home could mean around $10,000 in stamp duty, depending on which state you're in. First home buyers can apply for a stamp duty concession or discount.

Building inspection fees

This ranges from $200 for a smaller property to $1000 for a large one. Building inspectors will look for any structural issues with the house and is highly recommended before purchasing a house. Pest inspections are also recommended.

More from Moneyhound: Home loan exit fees explained

Council rates

Rates are different for every suburb and can be significantly higher in some areas. Most rates cost about $400 every 6 months and will cover everything from garbage collection to the local library.

Strata/Body Corporate fees

Only relevant for apartment owners and is used for the upkeep of shared facilities, such as elevator maintenance, pool cleaning and garden up keep.

Mortgage insurance

This is required by leaders if you are borrowing 80% of the purchase price or more. There are online calculation tools to figure out how much this could cost you depending on the purchase price of your property.

Compare home loans with $0 upfront fees here at Moneyhound.com.au

Extras:

Furnishings

Even buying cheaper home furnishings can end up a costly affair. Of course try to reduce costs by buying second hand. Get onto eBay, discount furniture stores and garage sales.

Home insurance

Home and contents insurance will give you peace of mind and is highly recommended when you have a mortgage. It will protect against fire, theft and damage against natural disaster.

Utilities

The initial and ongoing costs of phone, water, electricity, gas and even internet must be considered. Also, the price will vary depending on your provider.

Moving costs

If you’re on a budget then hiring a truck will run in around $500.

Repairs and future maintenance costs

Hard to judge just how much they will be but those who don’t get their property inspected properly (of course, another fee) may end up paying out thousands in repairs.

Related story from Today Tonight: Safer than houses, is owning your home the best option?

**More from Moneyhound:**
Solar panel rebates - how much you could save
Protecting your cash in a cashless world
How to raise financially independent kids
Make 2012 the year: spend less and save more - here's how
Stock take your monthly bills and save thousands

moneyhound

Homebuyers beware - hidden costs exposed and explained

When it comes to buying new property often homebuyers will often forget to consider all the costs involved – and unfortunately, forgetting just one can mean big bucks!

Home Loans

Credit Cards

Saving Accounts

iPhone 4S Plans

Broadband Plans

Electricity & Gas Prices

Help me find a home loan

Available to

Repayment type

Rate type

Include loan type

Required features

Repayment frequency

State/territory

Help me Save

Use our home loan interest calculator

Moneyhound helps you compare 907 home loans from 118 trusted issuers

Home Loans Latest News

What is Negative Gearing?

Banks vs Mutuals: What's the difference and who should you bank with?

Make the most of the RBA interest rate cut

How to be financially bulletproof

Compare more products and services

YAHOO!7 PERSONAL FINANCE

ALSO ON YAHOO!7

moneyhound

Homebuyers beware - hidden costs exposed and explained

When it comes to buying new property often homebuyers will often forget to consider all the costs involved – and unfortunately, forgetting just one can mean big bucks!

Home Loans

Credit Cards

Saving Accounts

iPhone 4S Plans

Broadband Plans

Electricity & Gas Prices

Newsletter

Help me find a home loan

Available to

Repayment type

Rate type

Include loan type

Required features

Repayment frequency

State/territory

Help me Save

Use our home loan interest calculator

Moneyhound helps you compare 907 home loans from 118 trusted issuers

Home Loans Latest News

Compare more products and services