Upfront costs when buying a home and how you could save

When buying a home many people focus solely on saving for the deposit. While your deposit is likely to be your biggest financial outlay, it’s only part of the cost of buying a home. We detail the other costs and fees you need to consider and how you could save.

Stamp duty:
Stamp duty is a charge applied by the State and Territory Governments in Australia and relates to the transfer of land or property. In some states/territories there are concessions available to certain purchasers e.g. if you are building a new home. It’s wise to check out the government website for your state or territory to understand the rules and exceptions that apply to your individual circumstances.

Borrowing costs:
When taking out a home loan there may also be a number of fees payable to your lender including loan establishment fees, valuation fees and settlement fees. However in today’s competitive lending market some lenders will offer cash-back incentives. The amount offered will vary, but could be up to $2,000 and can be used to cover some of your fees. Talk to a YML Finance specialist to find out how you could receive cash-back on your home loan.

Insurance:
There are a few types of insurance that you may require when buying a home including:

• Mortgage insurance: covering the lender for losses if a mortgage defaults and usually between 1-3% of the loan amount. Mortgage insurance is only applicable for home loans over 80% of the purchase price & this is a cost that you can avoid by saving up 20% or more for your deposit.
• Building insurance: is usually a condition of your mortgage and covers you if your home is damaged in the event of theft, fire, storm and flood.
• Contents insurance: covers you if your contents are stolen or damaged, some policies even provide new for old replacement of goods.

Legal costs:
Conveyancing is the process of transferring the property from the seller to the buyer. You can engage a solicitor or conveyancer to do this, or you can do it yourself. A licenced conveyancer will review your contract, perform checks on the title and draft the settlement documents. They basically guide you through the complex process of buying property and do the paperwork for you.

Inspection costs:

• Building Inspection: checks structural soundness and lists any visible defects and necessary repairs.
• Pest Inspection: checks for any signs of past or present pest infestation.
• Strata Inspection: examines and reports on the written records of the owners’ corporation.

Council, water and strata rates
When you purchase a property you are required to pay the vendor the remaining yearly or quarterly water and land rates. If you are moving into a strata title development, you will also be up for strata fees.

Utility connection
When moving into your new home you will need to pay connection or transfer fees to connect water, electricity and gas.

Moving costs
Finally, don’t forget that there will be removalists costs and possibly storage costs to consider as well.

There are a number of costs associated with buying a home, which can differ depending on the type of property you are buying and your individual circumstances. A YML Finance expert can provide professional advice and help reveal not only the costs you need to consider but also the savings available to you.

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