Before you start looking for a new home you should identify all the costs associated to making that purchase. The real costs can be much more than the purchase price.

1. Price of the home

If you know the price range of the properties you are considering then you have a good starting point. Lenders would normally want to see a 5% deposit. Most properties are listed above what the owner would accept so never offer the listed price or within the 'range' given.

2. Stamp Duty

Stamp Duty is one of the state governments most lucrative sources of revenue. We cannot see them scraping it anytime soon when it brings in between $5-$10 billion per year just in NSW alone. There is talk about changing the structure to make it a more consistent tax as it can fluctuate year to year.

Duty is based on the price paid for a property, buying vacant land first and building later can mean paying less stamp duty at the time of purchase than buying an established home.

In NSW first home buyers can get concessions for stamp duty. Up to a property value of $650,000 first home buyers will not pay stamp duty, this represents a saving of up to $24,470.

3.Conveyancing

You can use a solicitor or conveyancer to review the contract of sale and transfer your new home into your name. Solicitors can provide more specialised knowledge due to their legal background, while conveyancers will only be able to provide advice directly related to conveyancing. This generally means that conveyancers are usually cheaper than solicitors. The range would typically be between $700- $2500.

4. Pest and Building Inspections

It's absolutely essential to get a building and pest inspection from a professional. Buying a home or investment property is likely to be one of the biggest investments you will make. For around $600 it will reveal structural faults, pests infestations and any minor or major work that needs to be done.

5. Home Insurance

You need to have home building insurance as a requirement from the lender. It protects homeowners, landlords, and tenants against property damage, loss or destruction. Policies cover events such as fire, theft and natural disasters. It does not protect your belongings, this would be covered under a contents insurance which can be added. 

The average cost in NSW for home insurance is $1073.

6. Lenders Mortgage Insurance (LMI)

LMI applies if you borrow 80% or more of your homes value. It protects the lender, not you. Basically you pay for the lenders insurance, if you do not pay the loan it will make up the difference.

If you save a 20% deposit then you will not have to pay LMI. Also, some lenders allow you to add the LMI into the total cost of the loan.

See our LMI fact sheet for more details;

 https://newcastlefinancebrokers.com.au/lmi-fact-sheet