Thinking about purchasing a property? Getting into Perth’s property market is already expensive, especially for first home buyers. Most people understand the importance of budgeting their costs, but there are a lot more expenses often overlooked that can greatly weigh down your finances. In this article, we take a look at the costs involved with buying a home, so you can be fully prepared to put an offer in on a property with a mortgage that suits your budget.
1. Government Fees
Mortgage Registration Fee
If you are borrowing money to purchase a property, you will have to take out a mortgage. And the government requires it to be formally registered so that it can be viewed by a simple title search. This prevents you from selling your home without paying back the loan. In Western Australia, the mortgage registration fee as of 1st July 2020 is $178.20.
Transfer Registration Fee
A transfer registration fee covers the cost of transferring the title of your property from the previous owner into your own name. Registration fees for Transfer are based on the consideration or value assessed by the Office of State Revenue.
Landgate Title Searches
Your conveyancer will be required to obtain searches of the property through Landgate. Each search is $29.37 including GST. You may only require one search or you may require several. It is very important to be aware of any encumbrances that may burden your land.
Stamp duty is the tax you pay on the property you’re purchasing. The tax changes depending on the state you are purchasing in, the property type, whether this is your first property purchase, and whether it is an investment property or not. There are a number of online tools available to help calculate your stamp duty costs.
When your conveyancer advises the water, shire, land tax and if applicable strata company of the change of ownership at the property these departments charge a fee. In exchange for the fee paid you will not only update the ownership with these government departments but your conveyancer will also receive rate information and general information, they have about the property on their database. You can expect to pay anywhere from $200.00 to $500.00 for this service.
Rates and Taxes
Depending on the time of year you settle depends on how much you will need to pay for your portion of the water, shire and if applicable strata levies. An adjustment of Rates and Taxes will be made at settlement, once rate information is available.
Verification of Identity
The purpose of an identity check is to reduce the risk of fraud by requiring you to verify your identity as a buyer or seller and your authority to buy or sell the nominated land or property. All buyers in Western Australia must have their ID verified prior to settlement. If you cannot attend your conveyancer’s office to complete your ID check then Australia Post can complete this for you. The verification of identity service fee is $49.00 and payable to Australia Post.
PEXA (Property Exchange Australia) is Australia’s online property exchange network. It assists members – such as lawyers, conveyancers and financial institutions – to lodge documents with Land Registries and complete financial settlements electronically.On the 1st December 2018, PEXA became mandatory for all settlements taking place in Western Australia. The PEXA fee is separate from the statutory lodgement fees, which are set by each jurisdiction’s Land Registry. Each buyer will pay $114.07 per transfer and if you are obtaining a mortgage your lender will also charge you $42.24 to settle electronically.
2. Property Costs
Conveyancing Fee/Legal Advice
Hiring a conveyancer or property lawyer will ensure you are well informed on your buying decision and guarantee the purchasing process is stress-free and successful. The Australian Institute of Conveyancers WA (AICWA) advises against doing your own conveyancing – unless you are familiar with the process. Conveyancers prepare and lodge all the documents required to complete your property transaction. Most importantly, they conduct important searches on your property, often identifying legal issues with official ownership of the property. Conveyancers also hold your deposit safely in a trust account, adjust the rates and taxes on the property, and liaise with your bank to efficiently settle the property. Depending on the complexities of your purchase your settlement fee may vary. At C&R Settlements, we offer quality legal guidance with an affordable settlement fee starting from $880 (including GST).
Building and Pest Inspections
Building and pest checks are particularly important for older homes. Save money in the long-term and avoid the surprise of an unsafe, pest ridden property by budgeting for these inspections. Expect to pay between $400 and $600.
When buying a property there are many inherent risks which may cause you loss or affect your ownership. Title insurance is a specialised type of insurance that provides home buyers with protection against certain unknown and hidden risks which may exist at the time of purchase.
3. Financing Fees
Not to be confused with the aforementioned mortgage registration fee, there are many other once-off financing fees that you will need to cover the cost of. A mortgage establishment fee is charged by banks when you take out a loan with them, the cost of which varies amongst establishments. Other expenses include settlement attendance fees, as well as lenders’ mortgage insurance where you don’t have the full deposit amount. Mortgage insurance costs will depend on the specific lender, how much money is borrowed and the size of the deposit.
A property valuation from a professional will give you a good idea of the selling price you should settle for on the home you are interested in. Property valuations can cost you anywhere between $100 and $600, depending on whether you get a valuation from a bank or an independent valuer.
4. Moving Costs
Many people often overlook budgeting for their actual move into their new home. It’s important to remember various costs such as connecting utilities (e.g. gas and electricity), redirecting mail, the cost of removalists, and the cost of cleaning your existing property.
(Don’t forget to check out our handy moving checklist)
5. Ongoing Property Costs
Once you have bought your property and moved in, it’s important to always be wary of the ongoing fees that you will be required to pay. These can include:
- Home and contents insurance
- Utility connection for water, electricity, gas, and internet
- Strata/body corporate fees (if applicable)
- Cleaning/garden maintenance.
- Water & Shire Rates
Now that you have a better idea of all the costs of purchasing a property in Perth, you can start putting a budget together and begin the search for your dream home!
If you’d like to learn more about how C&R Settlements can help you secure your property, or you want some further advice in relation to hidden fees when purchasing your Perth property, get in touch with us today!