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The hidden costs of buying and selling a home

By Emily Lopez,2014-05-06 14:29
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The hidden costs of buying and selling a home

    The hidden costs of buying and

    selling a home

    You’ve saved up your deposit and you’re ready to go. Right ? Well, maybe... have you thought

    about, and calculated, the amount of entry costs?

There are many costs to be factored into the purchase price:

Stamp Duty

Most home buyers are required to pay tax to the state government. This tax is called stamp duty.

    This is paid on all property transactions including residential, retail and commercial properties.

    Most states now have some relief for first home buyer’s, reducing the amount of stamp duty that needs to be paid. Each State Government has a different formula for calculating the amount of

    stamp duty that needs to be paid. To find out how much stamp duty you’ll need to pay and to find

    out about offers for first homebuyers, go to:

ACT - www.revenue.act.gov.au

    NSW - www.osr.nsw.gov.au

    NT - www.nt.gov.au/ntt/revenue/index.shtml

    QLD - www.osr.qld.gov.au/index.htm

    SA - www.revenuesa.sa.gov.au/index.html

    TA - www.treasury.tas.gov.au/domino/dtf/dtf.nsf

    VIC - www.sro.vic.gov.au/sro/srowebsite.nsf

    WA - www.dtf.wa.gov.au/cms/osr_index.asp

Legal Fees

When purchasing property you would usually employ a solicitor or conveyancer to look after all

    of the paperwork.

You should allow somewhere in the vicinity of $800-$1200 for legal fees. This will vary

    depending on who you hire and the state that you live in.

Mortgage Insurance

Mortgage Insurance is an insurance policy that covers the lender for the amount of the loan given

    to you.

    It is paid by the borrower, usually as a once off premium, to cover the lender against the risks of

    the borrower defaulting on your loan. In other words, if you default on your loan, any amount

    unrecoverable from you, or your property is guaranteed to be paid to the banks from the

    Insurance Company.

For example,

    You purchase a property in 2003 for $400,000 borrowing $380,000(95%). You have not paid

    your loan for 6 months as you have lost your job and you still owe $370,000. The bank is forced to sell your property. The house is sold for $360,000 with selling fees of $10,000, leaving $350,000 to pay off the outstanding loan balance. The loan still has $20,000 to be paid. The bank will get paid $20,000 from the insurance company.

    The amount of mortgage insurance to pay depends on the % of the property you are looking to borrow. It is usually only charged when you are borrowing more than 80% of the property. The higher % you borrow, the higher the cost of mortgage insurance. As a rough guideline it is usually between 1/2 - 2% of the mortgage.

Mortgage Application Fees

    The amount of application fees varies greatly between lenders. Some charge nothing, others $1000 or so. Most are around $600-$800.

Mortgage Stamp Duty

There is also another tax that you’ll have to pay when getting a mortgage. It’s called Mortgage

    Stamp Duty. It is paid to the state governments and it varies around Australia.

    To give you some idea as to the cost, the following table gives you the amount of mortgage stamp duty payable on a typical $350,000 mortgage.

    Mortgage Stamp duty

    NSW $1341.00

    WA $875.00

    VIC $1364.00

    NT $0.00

    QLD $1120.00

    ACT $0.00

    SA $1215.00

    TAS $1215.00

    For further information on the amount of stamp duty and mortgage stamp duty payable in your state, and to find out about possible exemptions and discounts ring the number below in your state.

     Stamp Duty Inquiries Land Title Offices

    ACT ACT Revenue Office 02 6207 0029 02 6207 0491

    NSW Office of State Revenue 02 9685 2122 02 9228 6666

    NT NT Commissioner of Taxes 08 8999 6683 08 8999 6520

    QLD Office of State Revenue 07 3227 8733 07 3405 6900

    SA Stamp Duties Office 03 8266 3750 03 8226 3983

    TAS Office of Revenue and Gaming 03 6233 4976 03 6233 3299

    VIC State Revenue Office 03 9628 6777 03 9603 5444

    WA State Revenue Department 08 9262 1400 08 9273 7644

    Moving costs

This is quite often a cost that no one budgets for. How much is it going to cost to get your

    furniture from where you live now to your new home?

Now you might only have a TV and a lounge. You get your mate with a Ute over and presto. But

    if you’ve got a lot of furniture, you might want to hire a truck. This will usually cost somewhere

    between $100 and $300. Also, when hiring the truck make sure you know beforehand how much

    the excess km’s will cost you, and budget for this. One more thing, give yourself enough time to

    move, it’s amazing how fast 4 hours can go.

Now, if you don’t trust your boyfriend with the crystalware you might want to hire a removalist.

    The costs involved can vary greatly. From a small one-man-band operator who has no insurance

    who might charge a couple of hundred to a fully-insured respectable company who could charge

    you thousands. Ring some local people and get an idea of their charges before moving day comes

    along. The last thing you need on settlement day is an extra $500 that you didn’t budget for.

I would suggest if you are worried about your delicates go with a company who can produce

    evidence of the up-to-date insurance.

Connection of utilities

Another cost that most don’t put into their budgets is the cost to connect your electricity, gas,

    phone etc.

If you haven’t had an account with them before, some of the providers will want a bond to be

    paid, sometimes up to a couple of hundred dollars each.

Even without the bond, a connection fee usually applies to each one of the utilities, around $60-

    $100 for each one.

To avoid a shortfall arrange this early and find out how much you’ll need to budget and when it

    will need to be paid.

Building Inspection

Your solicitor, or conveyancer will usually advise that you get a building inspection. This will

    give you a complete picture as to the state of the property you are buying. They will look and

    investigate many things that you either didn’t pick up or just overlooked.

This inspection is invaluable. It’s essential. There have been many cases that I know of where the

    house has looked fantastic and in great condition. But, looking beyond the façade, everything

    from bad plumbing, shoddy workmanship, to just out right dangerous buildings have been

    detected.

Be careful, a lick of paint and some new carpet can disguise many problems.

And also, as a homebuyer you can’t help but be emotional. You can be blinded by the outstanding

    view. You might pick up the long grass, but you don’t happen notice the one inch crack in the

    brickwork.

Don’t take the risk - pay the cash.

Most building inspections will cost somewhere between $250 and $500.

Termite Inspection

    Like the building inspection most solicitors will advise that you get a termite inspection.

    You generally don’t know you have termites until it’s too late, and it can cost a fortune to repair the damage they cause whilst they munch on your timber.

A termite inspection will generally cost between $200 and $400.

YOUR BUDGET

COSTS

_____ STAMP DUTY

    _____ LEGAL FEES

    _____ MORTGAGE INSURANCE

    _____ MORTGAGE APPLICATION FEES

    _____ MORTGAGE STAMP DUTY

    _____ MOVING COSTS

    _____ BUILDING INSPECTION

    _____ TERMITE INSPECTION

    _____ CONNECTION OF UTILITIES

_____ TOTAL

    This report has been provided to you as a guide only, it should not be treated as fact. You should seek legal advise when considering buying or selling real estate.

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