The costs involved when buying a property
- Haynes Wileman
- Dec 6, 2022
- 2 min read
Buying a property is exciting, regardless of whether you’re climbing onto the property ladder for the first time or even if it’s your 10th investment property.
But some home buyers and property investors forget that there are more costs to buying a property than the purchase price alone.
To avoid being caught short, I’ve put together a checklist of all the fees, including any hidden costs, which you need to consider before planning your next purchase.
Purchase price
The biggest expense is, of course, the purchase price of the property, which is likely to be financed via your own savings or equity as well as a mortgage.
Stamp duty
Stamp duty is often the second-largest cost associated with purchasing a property and varies depending on the state you live in and the total price of your property.
It’s an unavoidable state tax levied on the purchase of all properties and could amount to tens of thousands of dollars.
Stamp duty on a $500,000 property for example, will cost you $21,970.
There are also mortgage and land transfer fees to consider, which usually amount to less than $1,500 in total.
Conveyancer or solicitor fees
A conveyancer, or solicitor, is the person who oversees, and manages, the actual transaction of the sale of a property from a seller to a buyer and manages the preparation of any legal documents needed for the transaction.
Fees generally vary as there is no official charge and in addition to the service fee, you will usually also be charged for ‘disbursements’ including a title search, certificate fees, photocopying and paperwork registration costs.
In total, the average cost of conveyancing can roughly be between $900-$2,200.
Accountant fees
A good accountant will pay for themselves many times over by understanding your personal situation and helping you structure your investments accordingly, as well as ensuring you take advantage of the myriad of legal tax “loopholes” available.
Paying for an accountant is even more valuable if you’re buying for investment purposes.
Research and/or buyer’s agent fees
A buyers’ agent will usually charge you a percentage of the purchase price of the property they secure for you.
But while some see it as a cost, I see it as an investment – mistakes are expensive and good advice is cheap in comparison.
Lenders mortgage insurance
If your deposit is less than 20% of the purchase price of your property, you will be required to take out Lenders Mortgage Insurance by law.
Loan application fees
Most lenders charge a home loan application fee to cover the costs of legal contracts, property title checks and credit checks and also a fee for setting up the mortgage in their banking system.
Loan repayment fees and interest
Once you have secured your home loan you’ll be charged both interest and also management fees.
Inspection report fees
A building inspection report and a pest inspection report will give you an accurate picture of the condition of the property and help you assess the likely costs of maintaining it moving forward.
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