Understanding the hidden costs of buying Sydney property
Wed March 21, 2018
Now that the holiday season is well and truly behind us, more and more buyers are returning to the Sydney property market looking for the home of their dreams. For first home buyers in particular, this is an incredibly exciting time, and it's worth enjoying it after the hard work that has no doubt gone into saving up your deposit.
However, it's also important to be informed, and to understand all the different elements of the property buying process, as well as its associated costs. These can go far beyond the deposit itself, and it's vital to know exactly how much you might need to spend as part of the buying process. This will ensure you have enough saved up to cover the costs without having to dip into what you've put aside for the deposit.
Before committing to any property purchase, it's critical to know everything that you possibly can about the home.
The cost of research
Before committing to any property purchase, it's critical to know everything that you possibly can about the home, from its structural integrity to the precise boundaries of the land itself. Compiling this information, if it hasn't been provided by the seller, can be expensive, as you'll need to conduct a property inspection and survey. According to Domain, the costs of a pre-purchase inspection in a metropolitan area such as Sydney can be as much as $1000.
This cost is well worth it though, and in the long run, $1000 is a lot less than the tens of thousands you might need to spend on fixing an issue such as termite damage, which an inspection would have identified.
The cost of time
Perhaps the most commonly overlooked cost associated with buying a new home is the amount of time required. According to Finder AU, taking one day off work a month to attend open homes can cost you as much as $4,000 a year if you're not getting paid for that time. Of course, it's not just your time that's valuable. Consulting with an accountant to ensure your finances are in order often comes at a premium - around $200 per hour, again according to Finder AU.
Fortunately, some of these costs can be minimised, particularly when it comes to your own time. Whenever possible, try to attend open homes on the weekend, or to simply take an hour out of your work day if it's not possible to arrange a viewing outside of your typical hours.
Whenever possible, try to attend open homes on the weekend.
The cost of buying
Finally, the most significant costs associated with purchasing a Sydney property come once everything else has been organised, and you've decided to make your move. These are known as 'upfront' costs, and can vary based on the type of property that you're buying and the type of home loan that you have.
The most important upfront cost, and the most expensive, is stamp duty. In essence, this is a form of tax that varies depending on the value of the property. In addition to tax, there are legal fees to consider, which again can vary depending on the complexity of the paperwork that needs to be prepared. In general, however, Finder AU recommends allowing between $1000 and $2000 for legal work.
Lastly, there are some additional costs that might need to be considered, depending on your situation. For example, if your lender requires you to have Lenders Mortgage Insurance (LMI), you'll need to factor that in as well.
Understanding these costs and how they might impact your budget is critical to making your property purchase a success. For more information on everything you need to know about buying property in Sydney, contact Laing+Simmons today.