Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020
Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

You may be at the point where you have decided it’s time to invest in some property. This can be a very exciting process; however, it can also be stressful and confusing. The hidden costs of buying a house (or apartment) can often throw a spanner into the works when it comes to planning your finances and budget, affecting the areas or properties you may be considering.

As with most things, being well-informed will save you many headaches throughout the process, especially when buying a property. So, to help you achieve this, Urban.com.au have put together this guide that covers the top ten hidden costs of buying a house (or apartment), so you will be well prepared.

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

1. Government fees

While there are also plenty of concessions from the Government that you should consider, there is also a stack of fees. The first government fee we will discuss is the mortgage registration fee, which is a charge put on the registering of a home loan that differs in price with each state. This registration means prospectors can check future claims on the property. To give you an idea of the cost, at time of writing the fees around Australia looked like this:

  • VIC $116.80

  • NSW  $141.60

  • QLD   $187

  • WA   $171.20

  • SA    $163

  • TAS    $135.09

  • NT    $145

  • ACT    $145

You will also need to consider the transfer registration fee, which covers the service of transferring the title of your property into your name. This is calculated based on the total cost of your property but has a cap in most states (in Victoria for example it is of $3,606).

2. Stamp duty

While it's technically a Government fee, we're giving stamp duty it's own category because it's a significant fee. It also isn't really "hidden" as plenty of people are aware of stamp duty, but once again, it makes the list because it's essential, and some people may not know the exact cost.

Stamp duty put simply, is the tax you pay on whatever property you are purchasing. Once again, this varies per state and is also dependent on:

  • The property type

  • If this is the first property you're purchasing 

  • If the purchase is for an investment property

The difference based on the points above can be significant. For example, in Victoria, there could be a difference of around $3000 in the stamp duty of a property for someone who is a first home buyer versus someone who isn't.

The calculation of stamp duty is based on a sliding scale as a percentage of the property purchase price; click here for a handy calculator.

3. Financing fees

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

If applying for a loan, there are a number of financing fees you will need to consider, most of which will be once-off charges. These will include:

  • Lenders' mortgage insurance (calculated based on the size of your deposit and how much is borrowed)

  • Mortgage registration

  • Settlement attendance

  • Loan establishment

  • Interest rates

4. Property inspection costs

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

It is always a good idea to run a number of inspections on any property you are considering purchasing to ensure you don't run into significant costly issues down the track. There are plenty of providers for these inspections so you will have the opportunity to shop around a little, but you will want to consider running the following checks on any potential purchase:

  • Building inspection

  • Pest inspections

  • Conveyancing (a fee of anywhere between $1,000 to 2,000)

  • Property valuation (anywhere between $100 and $600)

You will be able to get an estimated value on your property based on current market trends from your real estate agent; however, an official property valuation will give a more exact figure.

5. Moving and ongoing costs

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

Don't forget that moving into your new place, and decking it out with essentials, will cost money. You will need to organise the connection of your utilities, incorporate any removalist and cleaning costs, and consider the finalisation costs and bills for your current residence.

Unfortunately, homeownership costs never stop. There will be plenty of ongoing fees that you'll need to consider and incorporate into your budget including insurances, strata or body corporate fees if applicable to your property type (usually apartments) as well as council rates and emergency services levy.

6. Insurance

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

Just as you wouldn't drive your car without insurance, you shouldn't live in a property without it either. You will need to organise building and contents insurance, specialised personal effects for specific items of worth and if you are using the property as an investment, landlords insurance.

You may also need to consider insurance for any common grounds, specifically in apartment complexes which require public liability insurance. This cost is usually split between all of the property owners that the land applies to.

7. Information costs

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

As we mentioned earlier, being informed is the best way to avoid a myriad of pitfalls during the property-purchase process. To take this to the next level, you may want to consider reviewing suburb property reports which often comes with a fee.

This can sometimes cost around $150 for a suburb report, and depending on how long it takes you to find the right property, these costs may stack up. The benefit, however, is the valuable insights and information that these reports offer to help you make an informed decision on where to best spend your money. There are specific resources that will provide free versions of this information; however, the content is limited.

8. Professional advice

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

You may be seeking professional help during this process, which could include a licensed accountant or financial planner, as well as the right real estate agent. These costs can sometimes go as high as $200 per hour so you will need to not only take that into account but consider if having these elements handled by professionals is worth the expense. 

In most cases, the answer is yes, especially when it comes to organising your budget and ensuring that you do not over-commit to a financial responsibility that you won't be able to maintain. At least one initial consult with a financial planner is usually a good idea.

9. Travel costs

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

It seems like a simple one, but it is often overlooked the time and money that is required to go and view any properties that you may be considering purchasing to ensure you end up in the right neighbourhood. And we can't stress this enough, ALWAYS see a property before purchasing, it seems obvious, but once again, you'd be surprised...

The groundwork of searching for a property includes petrol, parking, and tolls, as well as your time, which may mean leaving work for a few hours for a property viewing or saying goodbye to a Saturday as you drive around to various inspections.

10. Bank cheque fee

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

We figured we'd end on a slightly humorous cost. Even though it is 2020 and technology has created the simple transfer of funds between financial institutions, you will likely need to buy your property with a good old fashioned cheque. 

We have no idea why this hasn't changed yet, even though it may soon.

Cheques, which take three to five days to clear, require your physical presence in a bank and use paper, are still the currency of choice in this exchange as opposed to a quick and easy electronic transfer. It baffles us, but expect to pay around $10–15 per bank cheque because...let's say, nostalgia?

Keeping informed when buying a house (or apartment in 2020)

Top 10 Hidden Costs of Buying a House (Or Apartment) in 2020

Despite the fact there are many things to consider it what can sometimes be a stressful process, purchasing property is a valuable experience that you will likely enjoy if you are well prepared.

Just remember to stay informed, budget accordingly and never bite off more than you can chew and you will be well on your way to an excellent investment and new home. Best of luck.

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