Buying a home in Sydney can be a very costly and daunting task, especially if it’s your first time. A lot of the over heads can be dependent on location and the size of land. So before you dive right into it, it’s always a good idea to do your own research so there are no expensive surprises.
Lets say you buy a home for $1,000,000 (easy math), below is a simplified representation of an overall cost you could be expected to pay when purchasing a home.
- Property value (10% deposit): $1,000,000
- Stamp duty: $40,000
- Conveyancer/solicitor & legal fees: $2000
- Lender’s Mortgage insurance: $20,000
- Pest & building inspection: $400
- Mortgage registration & transfer fee: $300
- Council & utility rates: Average $500 P.Q
- Total costs = $1063,200
Stamp duty is a tax that state and territory governments charge for certain documents and transactions. You must pay stamp duty within three months of signing a contract for sale or transfer, except in the case of an off-the-plan purchase.
First home buyers will not have to pay stamp duty for both new and existing homes for properties up to $650,000. The duty will be reduced for amounts between $650,000 and $800,000. See table below for more details.
|$0 to $14,000||$1.25 for every $100 (the minimum is $10)|
|$14,000 to $32,000||$175 plus $1.50 for every $100 over $14,000|
|$32,000 to $85,000||$445 plus $1.75 for every $100 over $32,000|
|$85,000 to $319,000||$1,372 plus $3.50 for every $100 over $85,000|
|$319,000 to $1,064,000||$9,562 plus $4.50 for every $100 over $319,000|
|Over $1,064,000||$43,087 plus $5.50 for every $100 over $1,064,000|
2.Conveyancer/solicitor & legal fees
A conveyancer prepares all the documents needed in your real estate transaction. They will manage the transfer documents to ensure the property is legally transferred to or from your name.
Although a conveyancer is not required, they are highly recommended and take a lot of stress off your hands of buying a property. A good conveyancer will guide you through all legalities, help you understand any issues in a property which you might not consider.
For instance they will be able to advise you about any easements on a property (a right to cross or otherwise use someone else’s land for a specified purpose). For example, if a property is built near an electrical easement this allows ‘right of way’ for Ausgrid to access, maintain and repair powerlines on private property. While ownership of the land remains with the property, certain restrictions may apply to how the land can be used. Which could potentially prevent future renovations, or extensions which you perhaps were considering doing on the property.
3.Lender’s Mortgage Insurance (LMI)
Lenders’ Mortgage Insurance is insurance that protects the person/company who is lending the money not the purchaser. A lender will require you to pay for LMI if your home loan deposit is less than 20% of the total value of your property.
This cover’s the lender in the situation of a buyer not able to afford to repay their mortgage. The lender is able to then sell the property to cover the cost of the loan which they have lent. If the property sells for less than the original price it was bought, then the LMI covers the lender to make up the cost.
4.Mortgage registration and transfer fee
The mortgage registration fee is paid when a mortgage is established or paid out against a property. The Land Titles office in each state or territory collects the fee for registering the lenders mortgage on the title record for the property, this cost’s average $150
Transfer fee is the payment you make when you move a balance from one account to another this cost average $150.
5.Pest & Building inspections
Pest and building reports are important when purchasing a property, they show the current condition of a property which might not be visible to the naked eye; termites, damaged tiles, mould, etc. They are put in place to protect the buyer from purchasing a property which might need a lot more work than they originally thought. They help the buyer identify the true value of the property in the sense of how much work is required or if the property is in mint condition and requires very little work.
Generally, the vendor will get this done for the cost of $50 and potential buyers can purchase the report at a cost of $50 to view. Then the successful purchaser of the property will pay the full report price which can cost any price upwards of $400. However, buyers are entitled to conduct their own pest and building inspection which again can cost upwards off $400.
6.Council & water rates.
Council rates are a property tax which fund a variety of programs, services, and infrastructure by the government for the public benefit. Council rates are generally paid quarterly and can range in price based off the lands size and location. In Sydney average council bill is around $300 a quarter and becomes more expensive towards the City Centre.
Water bills are issued quarterly and average $200 depending on usage and location of property.
– Julie Murray