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Expenses you must know about when buying a house

by Chris Lang on March 14, 2012

Saving to buy a house

When people are planning to buy a house, often the first question they think of is “Do we have enough money for a deposit?”. This is a good place to start, but the expenses involved in buying a house don’t just end there – in fact, there are many more costs people should know about in advance, to be able to budget this very important purchase.

Here’s a list that covers the most common house-buying expenses:

  • Valuation – if you would like to know what’s the real value of the house you are buying
  • Pest/termite, building, swimming pool inspections – to make sure that nothing is terribly wrong with your future home
  • Buyer’s agent – if you choose to get help from professional that will look for a house and negotiate instead of you with the estate agents.
  • Legal advice – if at some stage you feel like you need a lawyer on your side to check the contract, etc.
  • Conveyancing – to transfer the property title from the previous owner to you
  • Deposit – the heaviest expense
  • Stamp duty – the tax you pay to the government. Find out how much you will pay using this stamp duty calculator (in Victoria)
  • Mortgage application fee
  • Mortgage insurance – to cover the lender in case you can’t repay the loan
  • Home and contents insurance – to cover your asset and possessions
  • Moving expenses
  • Utilities connection fees

A useful exercise for prospective home owners

To gain a realistic picture of how close you are to owning a home, do the following:

1. Go through the list above and tick the items that apply to your particular situation.
2. Get estimates of the costs and fees for all ticked items.
3. Total the expenses and you will see how much you REALLY need.

What are your top tips on budgeting for a home purchase?

{ 2 comments… read them below or add one }

Brian March 17, 2012 at 7:59 pm

Good advice Chris.

Another thought is:
A lot of people often move to a bigger house that can mean extra rooms to be furnished, even at Ikea prices $1,000 doesn’t go far

Reply

Mel from RAMS March 20, 2012 at 2:11 pm

When buying a home, some people are unaware of these additional costs.

The cost of Stamp Duty depends on a number of factors including which State you purchase in, whether or not you are a first home buyer and whether or not you are going to live in the property.

Saving for these expenses may need to take priority. Many couples looking to purchase a property may also be wanting to do other things; like travel or get married if they haven’t already done so.
It is difficult to prioritise, so we have written a post to try and make it a little easier:
http://bit.ly/ybbB25

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