Hidden costs to look for when buying a house

Hidden costs to look for when buying a house

Louis: Liana from ANZ. Quelle surprise! Welcome to my humble abode.

Liana: Thanks, Louis. It's great to be here. I mean, I like what you've... uh It's minimal, isn't it?

Louis: Yeah, well, it's- It's not much, but something tells me that's why you're here, To help me uncover all the hidden costs with buying a real house. Come on, let's take a seat.

Louis Voiceover: ANZ presents What hidden costs to look for when buying a house. It's okay. I didn't know either.

Louis: So it's time. I really want to buy a home. I want to do it. Not that this one isn't enough. This is great. But I really want a place where I can nail, like, a million selfies onto my walls and renovate a bathroom. Buy a cat. I’m actually allergic to cats. Maybe even two cats. Treat yourself. But, like, when I search things online, I see things like stamp duty and my brain just goes- Kerck! Brr You know what I mean?

Liana: Yeah, I know.

Louis: It's a lot.

Liana: Yeah, it is. I know. It can feel really overwhelming but luckily these things aren't as complicated as they seem. Do you want to talk through a few of the different costs that might be applicable?

Louis: Yeah. Let's go on this journey together. As long as I have you by my side. Let's go stamp duty. I see it everywhere. Who is she?

Liana: The stamp duty is basically a tax that you pay when buying a property. The amount changes depending on the property and where you live. So every state and territory has different tax rates and different exemptions. You might not even have to pay stamp duty, especially if you're a first home buyer. So make sure you check out the rules about deductions you might be eligible for in your location. In addition to stamp duty, you've also got conveyancing fees which is when you get a conveyancer to check that there are no legal issues which will affect ownership of your property, and they'll also help with the transfer process.

Louis: Okay. I love learning things. Thank you. Yep. I'm taking it all in.

Liana: Excellent. Well, then you've got land transfer fees, which is a one off payment for legally transferring the land into your name. And there's lender's mortgage insurance, which is a one off fee that protects the lender If you default on your home loan. The amount of LMI you pay is calculated based on the size of your deposit.

Louis: Deposits? Yes. What's the deal?

Liana: So your deposit is a percentage of the house price that you pay upfront. The more you pay upfront, the smaller the amount you have to borrow will be.

Louis: So let's just say I've got all the costs saved up. I've got two cats. I've got the cat-induced allergies. What are the next steps?

Liana: Well, after you go to a doctor, go to your bank or mortgage broker for pre-approval on a home loan. So that's when they will look at your income, your borrowing capacity, and work out how much you can afford to borrow. And then you’re all set. You can go start looking around.

Louis: So like, time for house hunting?

Liana: Yes, absolutely. So with your pre-approval in mind, you can start looking at houses within that limit. You could put an offer in if you're really keen or you could go straight to an auction.

Louis: Auctions are so scary, don't you think? I'm scared that I'm going to walk into an auction and have an itch on my elbow or something, and then I have to put a down payment down accidentally on a $7 million house.

Liana: Well, it's not as loose as that, but the more help and guidance you can get throughout your home buying journey, the better. It can be good to talk to a friend or a family member who's recently gone through the home buying process themselves. And if you're going it alone, which is totally okay, there are various online resources to help you. And when you're ready, head to your bank or broker to see what you can afford and what grants are available so you don't miss out.

Louis: One thing about me is I do not want to miss out. FOMO is actually my deepest fear. If FOMO is your deepest fear. Subscribe to our channel and watch me as I upskill on a whole lot of other financial wellbeing topics. And once again, don't forget all the links in the description for some more helpful resources. Do you get scared? Of FOMO?

Liana: FOMO? Sometimes. I try and just go for it.

Louis: All right. I'm spiraling. Really scared. FOMO. It won’t happen. But do you love what I’ve done with the place?

Liana: I do.