The 7 Hidden Costs Of Buying A New Home
Make sure the budget’s not blown before you even begin, by considering ALL the costs of buying a new home.
On paper, buying a house seems easy. Find a place you love, in a location you love - with a price tag that works - then go ahead and make an offer.
Sounds simple, right?
And in theory, it is.
But often, what gets lost in amongst all the excitement, are the unexpected costs that pop up once that contract has been signed.
Far from insignificant, they can slowly add up, adding tens of thousands of dollars to the final purchase price.
So it pays to prepare yourself well in advance - before you start looking for your perfect pad - to make sure your ‘big-picture’ budget accounts for everything.
Here we share 7 of the most common hidden costs to consider when looking to buy a new home:
Stamp Duty.
While actual stamps may be small, ‘stamp duty’ is anything but. And just like licking one of those little suckers, it can leave a bitter taste in your mouth - especially if it’s been overlooked.
Often making up the biggest portion of post-purchase expenditure, it’s vital to ensure you’re across what your state government charges - because it varies wildly.
Some states charge nothing, others upwards of $10K, calculated either as a flat rate or based on the property’s value.
Either way, it’s not something you want creeping into your balance sheet when you’re not looking.
Fees & Charges.
Unavoidable when any large transaction takes place, these are the little bits that add up.
Apart from Stamp Duty, Governments often charge paperwork and admin fees for things like mortgage registration and title transfers.
Banks also play a big part in the process, and will hit you up for loan application fees, loan-specific legal fees, settlement fees and, if you need it, Lender’s Mortgage Insurance. Plus, there will be ongoing charges for servicing the loan, like interest and administration.
Property Inspections.
If there’s one piece of advice we’ll always give, it’s to make sure any property you buy is checked out by the professionals before you put pen to paper on a contract.
Have the property valued by an accredited appraisal expert - they’ll give you ultimate peace of mind by offering an honest and unbiased opinion on what the property is worth (so you’ll never be left wondering if you’ve overpaid).
Secondly, if you’ve truly fallen in love and want to make sure everything’s hunky dory behind the façade, have both a building inspector and a pest inspector go over it with a fine tooth comb.
The reason? Once a property’s sold, any problems instantly become yours - it’s certainly worth going in with your eyes open.
It’s an inspector’s job to sniff out any problems that may not be obvious, and help you avoid hefty repair bills later on.
Suburb Insight.
As with anything new, it’s wise to invest just a little cash into gaining some insider knowledge so you can make informed decisions.
Just like a Building Inspection peeks beneath the surface to spot structural problems, a Suburb Report offers insight into the surrounding area - it’s market data, population, amenities, demographics, median property values and value growth.
And while Google is free to search, there’s often a ton of inaccurate information lurking within its interweb.
Investing a couple hundred dollars in a professionally prepared Suburb Report could be worth it to find out - before you buy - whether a suburb is right for you.
Insurance.
Confusing, complicated and downright dull, insurance costs can easily be overlooked.
But given a new home is likely the most expensive thing you will own, it’s certainly worth protecting.
Understanding the costs involved in getting the correct cover is crucial when it comes to buying property.
While not cheap, taking out Home & Contents Insurance means your home - and anything inside it - is covered in a worst-case scenario.
And while things like theft, damage and natural disasters usually only happen once in a blue moon, paying for insurance upfront means you’ll avoid an even bigger financial hit if and when they do.
You should also consider budgeting for Mortgage Protection Insurance so you’re covered if your ability to repay the mortgage is impacted. While it’s not fun to think about, job loss, illness, injury and death can occur unexpectedly, so it’s important to be prepared.
Practical Costs.
What usually goes hand in hand with buying a new property? Moving!
And unless you already live next door, or have a plethora of family and friends on hand to help, there will likely be some cost involved to do so.
Hiring cleaners, trucks, trailers or even engaging a professional removalist company to help will all have to be factored in.
There’ll be one-off costs like disconnection and reconnection of utilities, alongside a few ongoing costs as well, like council rates, emergency services levies, and, depending on the property, strata or body corporate fees.
Plus, there’s incidentals too: new appliances and/or furniture, cleaning products and takeaway meals as you settle in. Although these might seem minor, they can definitely add up over a week or two!
Professional Service & Advice.
What price can you put on a smooth process?
The professionals are there to help guide you through what is often a very complex process, to make sure all the i’s are dotted and the t’s are crossed.
And while they all come with their own service fees, it’s good to remember that they are very likely saving you money (and a big headache) in the long run by ensuring nothing goes wrong.
Engaging a Financial Planner can make sure your budget is rock-solid when you’re in the process of house-hunting, while experienced Real Estate Agents are there to provide invaluable market advice, personalised service and guidance as you navigate endless listings.
And finally, engaging a Conveyancer to oversee the entire process from offer to settlement - which we highly recommend you do - will have fees attached too.
Rest assured that every dollar spent on engaging the right people will be worth it for the legal and financial headaches it will save.
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One of the most common missteps property buyers make is thinking the only costs they’ll face are the mortgage repayments.
And sadly, all those media stories you read about mortgage stress and defaults? They do exist.
So it’s super important to be prepared by making sure you’ve accounted for all of these hidden costs - including the not-so-obvious ones - to ensure you’re comfortably covered when settlement day comes.
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And if you’d like some expert guidance and support? We’re ready and waiting to answer all your questions!
If you’re just getting started, or looking for more valuable property buying or selling tips, tricks and hints, check out these other handy articles on our blog:
× Is Investing In Property Still Worth It?
× Should I Buy An Existing Property Or Build A New One?
× Does the Perfect New Home Exist?
And for all the very best property buying, selling or investing advice, why not connect with us - We Connect Property are your local property market specialists with over 21 years’ experience in buying, selling and managing property in southern Adelaide.
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Give us a call on 0403 799 983 today, or drop a line to sales@weconnectproperty.com.au - we can’t wait to chat!
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DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.