Are you aware of the extra costs you pay when buying a property? It's essential to be mindful of these additional expenses, as they can add up quickly and eat into your budget. Here are some of the most common extra costs associated with purchasing a home.
The True Cost of Homeownership
For many people, the biggest financial investment they will ever make is purchasing a home. Although a home can be a great investment, it’s important to remember that there are a number of additional costs associated with homeownership beyond the purchase price of the property.
In order to get an accurate estimate of the true cost of homeownership, you need to factor in all of the one-time and ongoing costs associated with owning and maintaining a home.
To get a better idea of the actual cost of homeownership, let’s take a closer look at each of these costs:
- Mortgage Insurance: If you are putting down less than 20% of the purchase price, you will likely be required to pay mortgage insurance. This insurance protects the lender in case you default on your loan.
- Home Inspection: A professional home inspector will check for any potential problems with the property. This can give you peace of mind and help you avoid any costly surprises down the road.
- Appraisal: An appraisal is typically required by the lender in order to get a mortgage. This cost is usually passed on to the buyer.
- Closing Costs: These are the fees associated with finalising the purchase of the property and can include things like title insurance, loan origination fees, and recording fees.
- Property Taxes: You will be responsible for paying property taxes on your new home. These taxes are typically based on the value of the property. One example is a stamp duty tax, which is charged on the purchase of a property. The amount of stamp duty you'll need to pay will depend on the purchase price of the property, as well as the state or territory in which the property is located.
- Homeowners Insurance: This insurance protects your home and belongings in case of damage or theft. It is typically required by the lender if you have a mortgage.
- Homeowner's Strata Fees: If the property you are buying is under strata management, you will be responsible for paying dues. These dues can vary depending on the amenities and services offered by the Strata Management.
- Legal Fees: When you're buying a property, you'll need to engage the services of a lawyer or conveyancer to handle the legal aspects of the purchase. They will charge you for their services, which can vary depending on the complexity of the purchase.
- Maintenance and Repairs: Once you own a home, you will be responsible for any necessary maintenance and repairs. This can include things like fixing a leaky faucet, repairing a broken window, or painting the exterior of your home.
- Utilities: Another ongoing cost of owning a home is the cost of utilities. This includes electricity, gas, water, and trash service.
Homeownership is a costly endeavour that requires much planning and consideration. Aside from the upfront costs, there are numerous ongoing costs any homeowner will need to face if they want to maintain a house and keep it in good condition. While homeownership has many benefits, such as building equity and creating a sense of stability, it is essential to weigh the costs carefully before making the decision to buy a home.
Buying a house is a big step and an even bigger burden on your finances, which is why you need the help of a reliable mortgage broker to help you get a good deal that suits your needs. That's what Wealthy You is here for. As Sydney's best mortgage broker, we help our clients by giving them access to financial sources through our mortgage solutions. Whether you're looking to invest in a new property or you're a first-time home buyer in Sydney, Wealthy You is here to help. Reach out to us today to apply and get your loan approved!