Ask LH: What Are Some Of The Hidden Costs Of Buying A New House?

Dear Lifehacker, What are some of the hidden costs of buying and moving into a new house? From sparta

New home image from Shutterstock

Dear sparta

Buying a home isn't as simple as just forking out the amount that has been listed for a property. There are a number of costs that you'll need to factor in when you become a homeowner. How much extra you need to pay will depend on a number of things including the value of the place you're purchasing, the type of property it is and where it is located.

There are legal fees which can cost thousands of dollars. Then there is stamp duty, which varies from state to state. You can estimate the cost with this online calculator. You'll also need to pay for pest and building inspections to check for infestations and defects. Those could cost a few hundred dollars.

We're not done yet. There is the loan application or establishment fee, cost of putting together additional legal documents, real estate agent fees, council rates and a few smaller fees here and there. If you're borrowing more than 80 per cent of the property's value from the bank you will also need to pay lenders mortgage insurance but that can be avoided if you save up for a bigger deposit.

For a property that costs around $500,000, the additional costs could add up to between $10,000 and $15,000.

So before you commit to buying a home, do your research first. It is best to speak to your real estate agent, bank, and legal representative to get some exact costings so you can budget for the additional charges and avoid any nasty surprises.

Good luck on finding a new home to call your own!

Cheers, Lifehacker

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Comments

    If you plan on living there yourself, there are also other living costs to consider. Moving costs, connection costs, things like that all add up quickly. For some, you get away without paying a bond because you're the homeowner, but do your own research for power/gas/phone connections first.

    I bought a new place some years back, and needing to pay for a phone line caught me out a little.

    Also, there may be some changes you want to make before you move in - new bathroom, new carpets, new kitchen, etc - that come with their own hidden extras. Removal costs, things like that.

    Maintenance costs - something is going to break at some point. Sure you can do many things by yourself, but plumbing and electrical get tricky. And just the time it takes to clean & maintain etx..

    Talk to a Financial/Home Loan Advisor. Best decision we ever made. He gave us a clear & realistic outline of the costs, timeframes & the best steps forward with saving & planning

      Definitely agree with this, at first I went straight to a bank, but then I met with a mortgage broker and it was a very eye opening and informative experience :)

    The biggest hidden cost TIME.... to pack and unpack, HOURS on the phones with service providers doing change overs, notifying people of change of address etc....

    and.... don't forget a few hundred bucks for changing over locks/keys etc... you don't know who has keys to the place when you move in if you don't take care of that one.

      Good call, I'm so slack with notifying of my change of address!!

    Thanks for the tips everyone! Keep 'em comin'!

    The most important one is factoring in immediate repairs and maintenance. People will let issues slide when they know they'll be selling. These typically include things like not refreshing termite treatments or replacing a temperamental hot water service. But it can also be major structural problems that will require extensive repairs.

    These may not be obvious when looking round. But would need to be addressed straight away. Which may be problematic if your budget has been maxxed out during the selling process.

    So, the best advice is to get an independent property inspection done, including for pests, and make the sale conditional on this. Expect to pay around $300 - 500. There are lots of industry regulations and recourse (i.e. they are liable for any issues not flagged) so the overwhelming majority of surveyors will be reputable and thorough.

    The report will give an idea of how much additional work (read: expense) is required. Sometimes it can be considerable. We walked away from a contract due to subsidence. The vendors had disguised a number of structural issues, which were picked up by the surveyor. Otherwise, we'd have been out for tens of thousands of dollars having the foundations underpinned.

    So I'd consider this an essential and worth every cent.

      @rickinoz I totally agree as there are so many home out there with issues that the owners are selling because its such a hot market. Instead of fixing the issue they just sell it onto an unsuspecting buyer. We have mandatory roadworthy certs for cars but nothing for homes!

      We couldn't afford an inspection for every home we looked at but we used an app called homeinspectr to at least give us some pointers and only got an inspector to have a look when we found issues. This helped us keep our deposit as high as possible.

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