Understanding Upfront Expenses for Homebuyers in Victoria
Victoria is a hotspot for property investment, and for good reason. With its booming economy and diverse landscape, there are endless opportunities for capital growth in the state of Victoria. However, with so many options comes complexity – particularly when it comes to the various fees involved in buying a property.
Upfront Costs When Buying A House in Victoria
Valuation Fee
Before applying for a loan, it’s best to know just how much your desired property really is. Property valuation fees vary depending on the region and the size of the property. Lenders usually add this charge to your mortgage application fee.
Mortgage Registration Fees
Home loans are the most common type of loan in Australia. Loan application or establishment fees refer to the costs associated with the application fees needed when setting up a loan.
The cost of loan application fees depend on loan amount and whether or not you’ll be using a mortgage broker. Lenders sometimes charge buyers a mortgage loan application for processing your paperwork. In Victoria, it usually costs only $150.
Lenders’ Mortgage Insurance (LMI)
Speaking or mortgage, the lenders’ mortgage insurance or LMI refers to the additional fees required by banks when they deem the borrowers to be high risk. You’re considered high risk if you fail to provide at least 20% of the purchase price of the property as deposit.
The LMI is usually distributed among your monthly payments as opposed to being demanded as a lump sum.
Conveyancing and Legal Fees
The amount of paperwork involved in buying a home is not a joke. That’s why many first-time home buyers (and non-first-time buyers) prefer to get the services of a conveyancer or solicitor.
It’s a good investment given that buying a home requires specialist knowledge and a keen understanding of the law involving mortgages and deeds. Conveyancing fees vary depending on whether you hire a solicitor or a conveyancer and it ranges from $800 to $2,200.
Stamp Duty
Stamp duty or land transfer duty vary per state government. It refers to the tax paid to the state for any transaction involving a sale of a land or title. The cost of the stamp duty depends on the property’s value and can reach upwards of thousands of dollars.
Luckily, there are stamp duty concessions for first-time buyers in Victoria. If you’re a first-time buyer of a property worth $600,000 or less, the stamp duty will be waived. For properties worth $600,001 to $750,000, there’s a concession amount based on a sliding scale.
There are online stamp duty calculators you can use to view the amount you need to pay in stamp duty.
Registration of Title
Before finally and officially, own your home, you are required to register your mortgage against the property’s title. This allows your mortgage to be viewed in a title search and declares you as the property’s owner.
Council and Water Rates
Council rates are paid by the seller until the end of the quarter. As a buyer, you’re required to pay your portion of that amount together with the purchase price. These fees varies from state to state and local council to council and largely depends on land valuation.
Unlike other utilities like electricity and gas that are cut off during the selling of the property, water charges have a crossover. As the buyer, make sure that the seller has paid all the water charges up until the settlement date before you take over.
Home Insurance Costs
Home insurance or building insurance covers the main building and fixtures that are permanently attached to the home. It’s vital to pay for insurance costs in order to protect your porperty against events such as fire, storms, and floods.
The cost of any insurance policy is based on the “sum insured” and the risk of needing to make a claim.
Building and Pest Inspections
Buying a house is a huge investment. It’s important to know whether or not it’s worth the money or if it’s a money pit waiting to happen.
Building and pest inspections are done by qualified professional inspectors. It covers everything from checking the work of the previous builders, the foundation, and the wirings.
The fees for building and pest inspections depend on several factors like property size and age, access limitations, and general condition of the property. Inspect East Building Inspections offer free consultation for full visibility of the costs you need to cover.
In Summary
So as you can see, there are a few more fees than just the principal fee when it comes to buying a home in Victoria, Australia. It’s important that you consider all of these fees so that you’re not caught off guard when it comes time to buy your dream home.
With this information in mind, you’ll be one step closer to making your homeownership dreams come true.