Few realise how much they need to have saved up to buy a home. While many first home buyers assume that they only need to save up a deposit, the reality is that they also need to save enough to cover stamp duty and other government fees.
So what can the government charge you for?
Stamp duty
This is the big one! The good news is that first home buyers in WA are eligible for a stamp duty exemption (Purchases up to $430,000 and pro-rata $431,000 – $530,000) and in some case, even a first home owners grant. This means you could save up to $8,800 on stamp duty when buying a home worth $300,000. Plus, if you’re buying a newly built property, you could be eligible for a $10,000 grant, which means you either don’t have to save up as much upfront or you can use that money to pay down your loan faster.
Another thing to consider is that it’s sometimes worth buying a more expensive property that you know you will be comfortable living in for a long time. This is because stamp duty is charged each and every time you purchase a property. So, if you move house 5 times and stamp duty is $10,000 each time, you will end up $40,000 worse off than if you just bought 1 property.
Transfer duty, mortgage registration fee & land transfer fee
Transfer duty is a fee the government charges for changing the ownership of a property from one person to another. There are backend processes and checks that need to happen for the government to process a sale and keep the property market regulated. This duty helps cover those government costs. The mortgage registration fee and land transfer fee are similar, but are not charged in every state or for every type of sale. It’s always best to check with your state government and conveyancer about what fees you’ll be charged.
Other costs
Buying a home and moving in is never cheap and there are other costs you should factor in when saving up your deposit. For example, all these things will require you to pay money:
· hiring a conveyancer
· pest inspection
· building inspection
· hiring a moving truck
· packing materials
· utility connections and cancellations
It’s important to know that every additional dollar you add to your loan will attract interest. Anything you can save for and pay for upfront out of your own pocket will be worthwhile in the long run.
To get help in calculating your costs, deposit and borrowing power, talk to us as Smartline Rockingham. We help people move into their dream homes every week.
