- Purchasing a home is a life changing experience in one’s life.
- The cost of the property depends on the location and value of the property.
- Property price includes other fees along with the actual property price.
Purchasing a home is a life-changing experience in one’s life. However, purchasing a house requires lot of investment, and one must be aware of the steps to buy the dream home with a loan/mortgage at a reasonable cost. It should be noted that the cost varies based on property value and its location.
In Australia, houses are sold by private sale at the advertised price or price negotiated with the vendor. The private sale of the property is coordinated and negotiated through the real estate agent.
Other than a private sale, people can purchase a home through an auction. At the auction, the property range is decided by the real estate agent. The property prices often sell for a higher than advertised range.
Against that backdrop, let us look at few important cost points that sums up the total price of a house in Australia.
How to finance a home purchase?
To buy a house, people can borrow money from major banks, credit unions, mortgage broker, building societies, and specialist home loan lenders.
Each lender provides different features and conditions. Hence it is essential that one understands their options, any in-built fees like exit fees, and the interest rate structure.
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Other costs involved in the buying process
Buying a house isn’t about paying the cost as mentioned on the property price tag. However, one should be aware of the cost involved in the process. It includes other costs as mentioned below:
Image Source: Kalkine Media Pty Ltd.
Conveyance and legal fees:
Conveyance and legal fees involve costs related to engaging a conveyancer or solicitor while purchasing a house to ensure a hassle-free buying experience.
Stamp duty refers to the tax which the buyer has to pay on a particular transaction and documents. While buying a property, the stamp duty is the tax that should be paid while purchasing the property.
Building and pest infection:
Building and pest infection fees involve when an individual engages with professionals to scrutinise the house for any problems.
Mortgage registration and transfer fees:
This fee includes the costs linked with officially registering a mortgage & transferring the property title upon purchasing a home.
Loan application fee:
Loan application fee refers to the application costs linked with considering and setting up the mortgage. These fees generally range from AU$500 to AU$600. There is also a possibility that the fees might exceed AU$1000. However, it would depend on the type of loan as well as the lender.
Mortgage insurance is an important requirement in the process of purchasing a house. It is a mandatory cash deposit required to enter a home loan. In many cases, if the deposit is below 20% of the purchase price of the property are required to pay mortgage insurance.
Council and utility rates:
Council and utility rates refer to the fee which a buyer pays for services provided by the council to the property.
Home and content insurance.
It refers to the insurance, which must be taken out as soon as an individual signs the contract. The cost may vary based on the value and the type of home, along with the insurance company involved in the process.
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Median Housing Prices in Australia:
As per Corlogic, below is the median prices for property in below regions during the month ending August 2021.
Image Source: Kalkine Media Pty Ltd. Source: CoreLogic © Home Property Value Index, August 2021
Image Source: Kalkine Media Pty Ltd., Data Source: CoreLogic © Home Property Value Index, August 2021
Approximate costing of a house: An Example.
Suppose the cost of a house is AU$550,000. To purchase the house a person can expect to give the below fees & taxes.
Expected cost would range in between AU$580,000 to AU$600,000
With the rise in the demand for property in Australia, one can expect a surge in the prices in the near future.