Everyone talks about getting their ‘deposit’ together and how much the deposit must be. Regardless whether you plan to have a 5%, 10% or 20% deposit there are 6 must know costs to factor in when buying your First Home or it could end up costing you more than you can afford.
One of the many things I do in the first appointment with a First Home Buyer, is to go through an estimate on what the expected costs will be for their purchase and what the left over funds will be.
This allow me to have a good discussion with The First Home Buyer around how much money they want in their account post settlement and therefore what the loan amount will need to be to ensure we have enough funds for the whole purchase.
When I do this calculation with my clients, I try to estimate every cost I can so we can ensure there are enough funds for the client to not only make the purchase, but to live comfortably after settlement.
What are the 6 must know costs to factor in when buying your First Home?
1.Stamp Duty
Some First home buyers get a concession on their stamp duty. This depends on a variety of factors including where you are buying, who you are buying with, how much you are buying for and if you’re buying as an investment or a home to live in.
To get an idea of what discounts you may be entitled to, you can visit the State Government site to do a calculation, you can find Queensland concessions here.
2. Government fees
There are some other Government fees when you’re purchasing your first home, these are Registration of Mortgage, Registration of discharge mortgage and Registration of transfer.
These Government fees depend on the amount you are purchasing for and depend on the state you are buying in. To help get an estimate you can visit the Stamp Duty Calculator here.
3. Solicitors Fees
You will also have a bill from your Solicitor either just before, or at settlement. This bill may also include search fees as well as the time and work completed, leading up to and during settlement.
You can get an idea on the cost of your Solicitor simply by asking them however, I find in Brisbane, my clients solicitor bill will range between $1200 to $2000 depending on the Solicitor and Searches you need.
4. Building and Pest Inspection
This is another forgotten cost, and whilst the Building and Pest report generally doesn’t cost too much, it is definitely something you want to include in the budget.
I have seen sale prices decrease as a result of a failed building and pest and, at times. I have seen contracts fall over completely. In Brisbane, Building and Pest reports typically ranges from $300 to $500 per report.
To find out more about Building and Pest Inspections click here.
5. Lender Fees
Another cost to consider is any Bank or Lender fees. These might be establishment fees, settlement attendance fees or even bank cheque fees. It really depends on the Bank or Lender you chose. (If you’re lucky, you may get a cash back offer).
The Bank or Lender fees are usually quite small, compared to the loan but I like to account for them to avoid any nasty surprises right when you don’t want them.
6. Emergency Funds
Where possible, I always encourage first Home Buyers to aim to have some ‘Emergency Funds’ set aside. This will come in handy on the day of settlement ‘just in case’ but, more importantly, it will give you a buffer when you move in.
Imagine if you used every last cent you had in your bank account to buy your First Home and the day after settlement a Rates Bill came into the letterbox.
In Summary
Your deposit will need to account for at least 5% of the purchase price (the more the better) but you will also need to ensure you have budgeted for all the Buying costs, and not just your deposit.
This will ensure you have enough funds to purchase comfortably.
If you are considering buying your First Home, or just want to know a little more you can book a FREE 15min strategy call with me here.
On this call we will cover your borrowing power, the costs associated with buying your First home and what tips and suggestions I can make to help you in your specific situation.
If you would like to know more about the Home Buying Journey as well as how to save for your deposit, then you can register for The First Home Buyers Program here.
This program will step you through the First Home Buying process and teach you all the tips along the way so you can borrow and buy confidently.
Want more information but not sure you’re ready? check out the Podcast channel here where I discuss everything a First Home Buyer needs to know and motivational tips along the way.
Check it out here.
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