When buying a home, there are certain extra costs which we need to consider. These costs are all in addition to the purchase price, some of them are proportionate, and others not. Often we are so concerned about the purchase price, and our budget, and we forget about these extra costs. Underestimating them can cause us to fall short with our finances come crunch time, or even worse, we feel the pinch after moving in to our dream home!
These hidden costs can be broken down into four groups.
1. Purchase costs:
In addition to the purchase price, prior to, and at the time of settlement, we will have the following:
a. Inspection Expenses – costs incurred during the initial contract phase where we get a licensed building and pest inspector to check over the property for any structural defects or pest infestations.
b. Legal Expenses – so the solicitors can conduct their searches and guide us through the settlement process.
c. Rates Adjustments – Council rates are usually paid in advance, so you will have to pick up the tab for your first rates period, up to 6 Months worth.
d. Loan Expenses – imposed on us by our finance company to create the loan, mortgage registration and associated bank costs.
e. Government Expenses – stamp duty (or transfer duty).
2. Inclusion Costs:
These are the things that you are used to in your current (and previous homes) that your new home may lack. Things like curtains that match the decor that your furniture, or favourite rug will bring with it. A screen door for the front because the previous owners didn’t have one.
Personal touches around the home, like a new welcome mat for the front porch, some new pot plants or a new outdoor setting for the back patio? A bare patio or an old sun-burnt outdoor setting will be a daily reminder of your extravagance with your purchase price if you can’t afford some new items when you move in to your dream home.
3. Welcome Costs:
It is said that some homes will appear to resent their new owners, they will almost seem like they have a personality! Neil Jenman writes “They will show their displeasure with a series of welcoming calamities to test their new owners.”
All jokes aside though, this can be frustrating to new owners. The oven stops working straight after moving in, a certain circuit keeps tripping the circuit breaker, the seemingly full gas bottle runs out right away, the solar hot water system blows up, the front door falls off its hinges.It’s strange how moving into a new home can unsettle certain aspects of it. If you haven’t kept some finances for these “just-in case” items, they can really hurt you, so be prepared.
4. Running Costs:
A lot of people forget about the running costs of a home. We make account in our budget for our home loan repayments, but what about other home ownership expenses like Rates and Home and Contents Insurance?
Don’t forget about regular maintenance costs as well, you need to be able to make sure the house runs like a well oiled machine, you want to be in it for a while don’t you?
Obviously there can be some variation in these costs, and not all of them will apply to every purchase, but as Buyers, we need to be aware that these costs can pop their head up and if we aren’t prepared for them, they can make life difficult.
But that’s what home ownership is about right? Taking a bit of calculated risk and gaining a bit of independance while having some extra responsibility!
For more info on these costs or the property buying process, please don’t hesitate to contact one of our friendly staff, they will happily answer any questions you have. Just call us on 07 4092 2232.