What Does it Cost to Buy a Home in Australia?

Cost to buy a home in Australia

beach houseIf you’re looking to invest in a piece of Australian real estate, it’s important to know the costs associated with buying a house. Home buyers, especially younger first home buyers, may not realise all of the extra home loan costs. From taxes to duty fees, home buyers must cover fees from the lending agency and state or government fees.

Because Australia is broken up into different states, each has its own laws on Stamp duty payments along with councils that decide how real estate transactions is handled. Fees may vary with water, sewerage and shire council rates across Australia  as well. But lenders tend to charge similar fees.

Lenders Home Loan Costs

Depending on the lender, it may work out slightly cheaper to go with one lender over another. However, most banks and lending agencies figure out a way to recoup costs one way or the other. Typical fees associated with applying for a home loan include the loan origination fee to set up the loan, the settlement fee, rate lock fee if you want to lock in your interest rate for 90 days, security guarantee fee if you list a guarantor on your loan, possible extra security fees and any required mortgage insurance.

Most of the above mentioned fees are included in the home loan amount. This means you aren’t required to pay this money up front, but it will add anywhere from $1,000 to $3,000 onto the total amount of your home loan.

Government Fees and Stamp Duty

Government fees include the registration of the mortgage and the cost assessed for transfer of the mortgage. The government will also collect the stamp duty levied against the mortgage and the price of the property. Land tax is assessed by the Revenue office and collected by the government.

Stamp duty is a general tax levied by Australia on certain documents. For real estate the stamp duty is typically levied on the total value of the real estate along with a set fee. For example, in Western Australia the duty rate in 2006 for a home valued between $100,001 and $250,000 was $2200 plus 4% of the value. You must factor in this added cost when budgeting to buy a home.

Miscellaneous Costs of an Australian Home Loan

Along with the required costs imposed by your lending institution and the governing body, there will be extra costs that may or may not be optional. Some of these costs include:

  • Solicitor fees if you needed assistance buying your home
  • Inspection report fees if you wanted to check for structural problems of the building
  • Home insurance to insure the contents of your new home.
  • Connection fees to have your lights, phone, and Internet turned on by the time you move into the residence.
  • Council costs if you want or the council must inspect your property

All home buyers must remember to factor in all costs when budgeting to buy a home. An extra cushion of around $5,000 should help cover the majority of the costs associated with an Australian  home sale.

Thanks for taking the time to read this weeks wrap up.

Regards Richard Colum

Western Australia.

Tags: home loan costs, Australia home loan, buy home in Australia




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