3 Hidden Costs Buyers Often Forget When Buying A Home
When you’re in the midst of buying a property, it can feel like money is going out left, right and all ways in between. This is one of the most common realisations I have from buyers who are on the property buying circuit for the first time, when things start getting to the pointy end of their purchase.
Yep, it can feel like a drain on the old finances, but the reality is, you knew this was coming.
It probably just didn’t feel real until the deposit had to be paid, and then the building and pest inspection needed to be booked; the solicitor asked for their fees upfront and last but not least, the big chunk at settlement to finalise the purchase was handed over, and wallah! now you’re feeling broke, exhausted, depleted, BUT HUGELY EXCITED all at the same time!
Because now, you’re the proud owner of your very first home.
Despite the sudden drain on what feels like a lifetime of savings, the first home buyers who I have worked with seem to move past this phase pretty quickly and begin focussing on life in their new home, rather than all the money that went out of their account to buy the place.
But what happens when you haven’t planned the finance side correctly?
What happens when (heaven forbid) you miscalculate what you need money wise and all of a sudden, you’re having to find extra funds (somehow) to complete the purchase.
Lets run through a few of the unlikely things buyers miss when they go to buy their first property.
First cab off the rank is Stamp Duty.
First home buyers are often aware of what stamp duty is, but don’t know how to calculate it correctly. Remember, stamp duty is paid ON TOP OF the purchase price of the home. You can always google “Stamp Duty Calculator” and plug your purchase information into one of the many online calculators available, but I always recommend having the figures confirmed by a solicitor before you move ahead.
Have you ever heard of the Foreign Investment Review Board? If you’re not an Australian citizen or resident and you’re trying to buy your first home, you may have to jump through some extra hoops under Foreign Investment legislation when it comes to buying property in Australia. Additional stamp duty and restrictions on the type of property you can buy come into play if your purchase is subject to foreign investment review. Again, look up the links at Foreign Investment Review Board Australia or talk to a solicitor about where you stand when it comes to Foreign Review.
You might have budgeted your solicitors fees but did you allow enough funds in the kitty for searches? What many first time buyers don’t realise is that searches are an ADDITIONAL cost on top of the solicitor’s professional fees. Some solicitors have a “standard searches” component included in their fee, but many do not, and if you want additional searches, you may need to pay extra. This can easily run into a few extra hundred dollars coming out of your pocket.
There may be some additional property searches your solicitor recommends you do, depending on the type of property you decide to buy, so having the funds readily available for all necessary searches is critical if you want to get your purchase right and perform due diligence correctly.
For a detailed list of purchasing costs, my soon to be released First Home Buyers E-Kit will give you clarity here, as well as a reveal whole host of other hidden elements you probably won’t think of when it comes to your first purchase.
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