7 Hidden Costs in Buying Your First Home in 2022

If you’ve just started saving money, or if you’ve already got the savings to put down a deposit for your first house, great work! But the loan for a new home isn’t the only cost on the horizon.

With house prices as high as they are, times are tight if you’re looking to buy your first home. That’s why now, more than ever, you need to be aware of the hidden costs you’ll face when deciding if you can afford the house of your dreams.

So, here are the 7 hidden costs of buying your first home.

1.          Stamp duty and other legal fees.

Every house bought and sold has a fee paid to transfer the name on the deed. Stamp duty, along with a few smaller fees. Some states in Australia have concessions for stamp duty for a first home buyer. Unfortunately, South Australia isn’t included in that list.

So, how much will you have to pay for stamp duty? It depends on the property. Stamp duty is calculated on the market value of the house, or the sale price, whichever is higher. Including the lodgement and transaction fees, it’s typically somewhere between $20 000 and $50 000.

Along with these upfront costs, you’re also likely going to be engaging the services of a conveyancer to handle all the legal proceedings for you. A conveyancer is easily worth the money spent, saving you from making costly mistakes and simplifying the process, among many other services.

2.        Costs associated with your home loan.

Besides just finding the best value home loan for your situation, there are other costs that you need to consider when shopping around.

You’ll have to pay a mortgage registration fee, a loan application fee, and lenders’ mortgage insurance in some circumstances.

Lenders’ mortgage insurance, or LMI, is an additional premium added to your loan if you don’t have at least 20% of the cost in your deposit.

While it may seem prudent to hold off on buying your first home until you can save for a 20% deposit, it’s not quite so simple. Getting in earlier to a growing housing market will often offset the extra cost of LMI. Typically, if your property value grows by more than 5% per annum, then paying the LMI is worthwhile.

3.        Home insurance.

Whilst not strictly required by law, home insurance protects you from paying huge bills when things do go wrong, so it’s not a great idea to do without.

In South Australia, the buyer is liable for any damages to the property the moment a contract is signed. So, be sure to have your home insurance in place at the right time.

On average, home insurance in SA is around $1 000 per annum, but it depends on many factors. It’s a good idea to shop around and compare the market.

4.       Council rates and strata fees.

Your local council requires a quarterly or yearly payment to maintain the public spaces and provide a range of benefits to the community. So, how much do you need to pay in council rates? It depends on your property’s value, but South Australians pay around $30 a week on average.

Also, if you live in an apartment, townhouse, or any other building listed under a strata deed, you’ll need to pay strata fees. These fees enable your strata to manage shared services and spaces like building maintenance or parking. Depending on the location of your property, the scope of the shared spaces, and many other factors, you’re looking at paying around $500 to $2500 per quarter.

pre-purchase house inspection for a first-time home buyer

5.        Pre-purchase inspections.

When you’re looking at what is potentially your new home, you’ll want to be sure that it’s up to scratch. In some cases, you’ll need to pay for a building and pest inspection, which can cost around $500 each, depending on the property.

We go into building and pest inspections in a previous blog, which you can read here.

6.       Repairs, maintenance, and renovations.

If you’re looking to buy a fixer-upper for a lower price and spend a lot of your free time getting it up to scratch, you can really save a lot of money on your first home.

Repairs and renovations can be much more expensive than you anticipate, though, especially if you’re planning to hire professionals to do the work for you. You can quickly be paying tens of thousands of dollars out of pocket to bring your new house up to the standard you want.

Even if you have a reason in buying a house in excellent condition, maintenance and unexpected repairs can be costly. It’s essential to have money set aside for problems that crop up.

7.       Moving in.

So, you’ve just signed the contract on the house of your dreams. You have a loan, a plan, and some savings set aside. You have the keys, and you’re ready to move in!

It may seem like a small cost compared to the hefty price tags on everything else associated with buying a new house, but the timing and stress can quickly blow out a budget. If you set some savings aside for the big upheaval, the process will be smoother and less stressful.

If you’re building or buying a brand new, unoccupied property, you can access the First Home Owner Grant.

If you’re looking to build, or buy a brand new, never occupied property, you may be eligible to offset some of the costs with the first homeowners grant. The $15 000 sum can help you start owning your first home. Before taking the plunge and buying a house, it’s important to understand all of the potential costs that go along with it. From Form 1 documentation fees to cooling off periods – there are lots of hidden surprises lurking around every corner. Make sure you do your due diligence in order to guarantee an informed purchase!

Are you ready to get started with planning and buying your first home?

Talk to a conveyancer that will listen, answer your questions, and guide you down the right path.

At Beltana Property Group, we are experienced conveyancers in South Australia. We tailor our advice and services to meet your specific circumstances to ensure we provide you with a smooth, stress-free experience. By engaging Beltana Conveyancing, you can be assured that you won’t be caught out while navigating the property market.

So, if you’d like to chat with us about your property goals, whether it’s in metropolitan Adelaide or regional South Australia, we’d love to hear from you and find out if we can help you achieve your dreams.


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