Cost of buying a home with a commercial home lender
There are a range of costs to consider when buying a home. The following table shows an example of the costs that may be associated with buying a home for $350,000.
To fund this purchase you would need to contribute $52,500 of your own savings to meet deposit, stamp duty, conveyancing and legal fees, and mortgage insurance. You would need to borrow $315,500.
|Purchase price||350,000||Savings (deposit plus stamp duty, conveyancing and legal fees and mortgage insurance³)||52,500|
|Conveyancing and legal fees¹||4,000|
|Mortgage insurance²||3,500||Required loan amount||315,000|
|º The amount of stamp duty payable will depend on the purchase price of the property and the state or territory in which it is located. Some states and territories do not charge stamp duty for first home buyers.
¹ The costs for conveyancing and legal fees will depend on what your solicitor or conveyancer charges and the cost of any searches or inspections that need to be undertaken (for example, pest and building inspections).
² The amount of mortgage insurance payable will depend on the amount of your deposit and your lender’s requirements.
³ In this example, 10% of the purchase price plus stamp duty, conveyancing and legal fees, and mortgage insurance.
The figures provided have been prepared for general information purposes. You should seek professional advice to verify the accuracy and currency of this information, and to determine whether the information is relevant to your personal circumstances.
Mortgage insurance is generally taken out by lenders on loans where the deposit is less than the minimum required percentage of the purchase price. Mortgage insurance protects the lender from potential loss. The cost of the insurance may be added to the amount of the loan or you may need to meet the cost upfront in addition to your deposit (IBA does not require mortgage insurance and IBA deposit requirements are lower than a commercial home lender).
If you are a first home buyer, you may be eligible for home purchase assistance from your state or territory government.
Read more about the First Home Owner Grant Scheme.
If you are buying an existing or newly built home, the purchase price will be the sale price you agree to pay to the vendor.
If you plan to purchase and upgrade an existing home, you need to take account of the purchase price for home and renovation-related costs as part of the overall cost of the purchase.
If you are buying land and constructing a house, you need to take account of the cost of buying the land plus building costs.
Stamp duty is a government tax that varies depending on which state or territory you live in.
Some first home buyers may be eligible for a stamp duty rebate or exemption, but to qualify the property must be your first home and your main residence. The stamp duty office in your state can provide you with information on how much stamp duty you will have to pay, how it is calculated and if you are entitled to a rebate, exemption or deferred payment arrangement.
Read more about Stamp Duty.
Conveyancing is the transfer of property from one person to another. Conveyancing fees vary depending on where you live and where you are buying. Ask your solicitor, conveyancer or settlement agent to give you a written estimate. To find solicitors or conveyancers in your area, contact your local Law Society or the Australian Institute of Conveyancers.
Whenever a property changes hands, the change of ownership must be recorded with the relevant Land Titles Office in your state or territory. Registration fees are payable and vary by state and territory. A document known as a Transfer of Land must be lodged by your solicitor on your behalf.
Legal fees include the costs charged by your conveyancer or solicitor. These may include the costs of undertaking any required property searches and inspections.
Your solicitor or conveyancer should advise you of which searches and inspections you will need to undertake. These may include:
- Title search: a Certificate of Title obtained from the Land Titles Office by your solicitor or conveyance provides details of who owns the property and helps identify any problems that would affect the transfer of title.
- Building inspection: the cost of a building inspection will depend on the type of property and the amount of detail required. The written report should detail any flaws, including problems with damp, the structure of the building and the roof.
- Structural inspection: this visual inspection examines the condition of the property’s foundations, bearing walls, beams and columns, floor, framing, crawlspace areas and drainage. These areas are checked for deterioration and damage and the report may make recommendations for repair.
- Pest report: this report will identify any pest infestation, such as termites or ants, in the property that could affect the structure of the home.
- Strata inspection report: this report checks the records of the owner’s corporation/body corporate including information on current and past levies, taxation, notices and orders, past building work and other matters impacting on the strata.
Loan application fees
Lenders may also charge a loan application fee or a professional fee for mortgage preparation. You will need to check with your lender to determine whether you need to pay for these costs upfront or if they will be added to your loan. Lenders, such as IBA, will require a property valuation as part of the loan assessment process.
In addition to meeting the purchase costs, you will need to set aside some money to cover additional costs.
These will include the cost of moving from your current location to your new home, which will vary depending on the distance, the volume of items to be moved and the removalist you choose. You will also need to pay for connecting utilities, such as electricity and phone, redirecting mail, and possibly carpet and other cleaning costs.
Insuring your home
Lenders, including IBA, will require you to insure your home against losses. The insurance requirements will vary for each state and territory, so check with your solicitor or conveyancer about exactly what type of insurance cover you will need.
Home, building and contents insurance can protect your home, land and contents against a range of events including fire, theft, malicious acts and storm damage.
If you are building a home, check that your builder has their own insurance in place before construction starts.