How much does a first home cost from dream to keys?

Written by in Buying on August 14, 2017

How much does a first home cost from dream to keys?

We’re all aware of rising house prices and staggering medians – $1.1 million in Sydney for example – but what does a first home cost when the tax office, revenue office, lender, lawyer, and conveyancer have all taken their share? Here’s a roadmap showing you how the list price of your first home is only the beginning of your outlay.

Big business means big government

Your state or territory government revenue office will charge stamp duty (just like that on a car, if you’ve ever bought from a private seller). This varies from state to state. Let’s say you have your heart set on a $600,000 house. If you live in NSW, you’re in luck: the State Government has abolished stamp duty for first homebuyers on homes worth up to $650,000. For a house worth $700,000, your mortgage registration fee, transfer fee and stamp duty will cost you about $27,267. However, with a $16,500 government concession, this comes to about $10,767. In other states, the totals (without any eligible concessions) are:

VIC: $27,059
QLD: $19,480
WA: $27,732
SA: $37,996
TAS: $27,083

Not only that, but you will have to pay for rates or land tax, depending on your shire or council rules. This may range from $500 to over $1,000.

A home located in Melbourne, Australia

Paying insurance for your first home…against yourself

If you are getting into the property market without a 20% or higher deposit (which is many of us), you will have to purchase Lender’s Mortgage Insurance. This is insurance against the borrower (you) defaulting – which means failing to pay back the loan. Using our example home of $650,00, LMI will come to about $25,025 on a $50,000 deposit (14% of the total value of the home). You can reduce that amount with more of a deposit, or with a guarantor, also known as a co-signer. Beware: if you can’t pay the loan back, your guarantor is also in trouble!

Lawyers, lenders, and fees

Another first home cost you will incur are a solicitor’s or conveyancer’s fees, which range from $300 – 400, which can include legal database searches to make sure your property has no outstanding claims. Banks will charge a mortgage establishment fee, which can cost at least $500. To save headaches later, it’s worth getting a pre-purchase inspection done to make sure your structure is sound. Depending where you live, this can cost anywhere from $300 to $1,000.

As you can see, your first home cost adds up. Take the time to fully understand all the financial commitments there are before purchasing your first home.

Author: Bill Tsouvalas is CEO and managing director at Savvy, mortgage brokers specialised in first home buyers, refinance and sub prime home loans. He has a been working in the mortgage & asset finance industry for over 10 years. He often writes articles on mortgage, finance, and insurance topics.