This makes it even more important to be aware of the many costs associated with purchasing your own home when working out your budget – after all, you want to have as much as possible available for the actual property.
Financial assistance
In addition to the $7,000 first home owners grant, those buying or building a new home can access thousands more before 1 July 2011. Check with the State Revenue Office to ensure you understand the eligibility requirements.
Borrowing costs
Before beginning the search for a new home, you should ascertain how much you can afford to borrow then obtain loan pre-approval from the bank. When combined with your savings, the amount you borrow has to cover more than just the cost of the property, such as the loan establishment fee, mortgage insurance and stamp duty.
Fees will vary from lender to lender, so be prepared to shop around for the best loan to suit your needs.
Stamp duty
In Victoria, stamp duty on a property is currently can be as high as six per cent depending on the value of the property. The government has promised to cut it by 20 per cent for first home buyers by the middle of 2011.
Valuation report
It may be worthwhile obtaining an independent valuation report on a property to indicate its current market value. The valuation must be conducted by a Certified Practising Valuer.
Legal costs
Obtain assistance and advice from a solicitor that will help you navigate through the contractual process. Fees are negotiable, so shop around and compare rates.
Building and pest inspection reports
Undertaking such a report may save you thousands of dollars in the future and will highlight the need to undertake work on the property and possibly make allowances in your budget for it.