Whether you're a first-time home buyer or property investor, our online calculator allows you to be aware of the costs involved in buying or selling a property before embarking on the lengthy and expensive process.
In the meantime, I’ve put together all the information you might need on costs involved in buying and selling a home, including all the hidden ones you might not even know about.
The costs involved when buying a property
Buying a property is exciting, regardless of whether you’re climbing onto the property ladder for the first time or even if it’s your 10th investment property.
However, some home buyers and property investors forget that there are more costs to buying a property than the purchase price alone.
To avoid being caught short, I’ve put together a checklist of all the fees, including any hidden costs, which you need to consider before planning your next purchase.
1. Purchase price
The biggest expense is, of course, the purchase price of the property, which is likely to be financed via your own savings or equity as well as a mortgage.
2. Stamp duty
Stamp duty is often the second-largest cost associated with purchasing a property and varies depending on the state you live in and the total price of your property.
It’s an unavoidable state tax levied on the purchase of all properties and could amount to tens of thousands of dollars.
Stamp duty on a $500,000 property in Victoria, for example, will cost you $21,970.
There are also mortgage and land transfer fees to consider, which usually amount to less than $1,500 in total.
3. Conveyancer or solicitor fees
A conveyancer, or solicitor, is the person who oversees, and manages, the actual transaction of the sale of a property from a seller to a buyer and manages the preparation of any legal documents needed for the transaction.Fees generally vary as there is no official charge and in addition to the service fee, you will usually also be charged for ‘disbursements’ including a title search, certificate fees, photocopying and paperwork registration costs.
In total, the average cost of conveyancing can roughly be between $900-$2,200.
4. Accountant fees
Good accountants will pay for themselves many times over by understanding your personal situation and helping you structure your investments accordingly, as well as ensuring you take advantage of the myriad of legal tax “loopholes” available.
Paying for an accountant is even more valuable if you’re buying for investment purposes.
5. Research and/or buyer’s agent fees
A buyers’ agent fee is usually calculated as a percentage of the purchase price of the property they secure for you.
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But while some see it as a cost, I see it as an investment – mistakes are expensive and good advice is cheap in comparison.
6. Lenders mortgage insurance
If your deposit is less than 20% of the purchase price of your property, you will be required to take out Lenders Mortgage Insurance by law.
7. Loan application fees
Most lenders charge a home loan application fee to cover the costs of legal contracts, property title checks and credit checks and also a fee for setting up the mortgage in their banking system.
8. Loan repayment fees and interest
Once you have secured your home loan you’ll be charged both interest and also management fees.
9. Inspection report fees
A building inspection report and a pest inspection report will give you an accurate picture of the condition of the property and help you assess the likely costs of maintaining it moving forward.
The costs involved when selling a property
And it’s not just property buyers who are faced with a myriad of costs, sellers are also slumped with everything from conveyancing costs to agents’ fees and marketing expenses.
Here are all the costs you need to consider before putting your property up for sale to avoid making any costly mistakes.
1. Marketing fees
The seller is responsible for covering the cost of marketing their property for sale, the fees for which can vary greatly depending on the state, property value and type of marketing you opt for.
2. Conveyancer or solicitor fees
Similarly to conveyancer or solicitor fees for a buyer, for a seller, the fees generally vary as there is no official charge and in addition to the service fee, you will usually also be charged for ‘disbursements’.
Disbursements can include a title search, certificate fees, photocopying and paperwork registration costs.
In total, the average cost of conveyancing can roughly be between $900-$2,200.
3. Agent fees
Agent fees for a seller can either be at a flat fixed fee or as a percentage of the sale and vary depending on the agent and the value of the property.
4. Lender fees
If you have a home loan on the home you’re selling, you’ll need to pay your lender a discharge or early exit fee in accordance with your home loan agreement.
What will your property purchase or sell cost you?
So there you have it. As the above shows, there are many costs involved when buying or selling a house, some of which you might not even realise you need to budget for.
You can use our home buying and selling calculator to get a better idea of what it might cost you.
