What are the expenses I should forecast for when buying first home?

Discussion in 'The Buying & Selling Process' started by nushydude, 12th Sep, 2017.

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  1. nushydude

    nushydude Well-Known Member

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    Hi,

    Buying the first home here. We are eligible for the stamp duty exemption in VIC because of our budget.

    I'm trying to calculate how much cash we should keep handy after buying it.

    These are the costs I'm forecasting. Have I missed anything? (the amounts I've put are overestimations)

    - conveyancing/legal costs: $2000
    - title transfer fee and mortgage registration fee: how much is this?
    - building inspection costs: $1000
    - removalist costs: $1000
    - costs related to the mortgage (I'm in the process of getting accurate figures from the broker): less than $2000?
    - utility (water, electricity, gas, NBN) connection fees: $1000 (honestly I have no idea what the rough costs are)
    - home and content insurance fees: $100/month? (Is there an establishment fee?)

    Anything I missed?

    Cheers
     
  2. Big Will

    Big Will Well-Known Member

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    Deposit + Loan/repayments - Biggest one but assuming you had factored it in
    Stamp duty - different states have different rules and grants.
    Any improvements you want to make shortly after settlement - ?
    Council Rates - If you are settling in say October and December you get charged a yearly fee then it might be unexpected
    Break lease - if leasing
    Other inspections (electrical, plumbing, engineering) if required
    If you getting council approval for something (e.g. subdivision) but assuming not from your post.
    Valuation report - Most likely not required

    Your B&P inspection cost of 1k is likely 2 reports/properties.
    If you are actually needing to connect those utilities to the property (as in physical connecting pipes) then your costs would be a lot more.
     
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  3. kierank

    kierank Well-Known Member

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    I typically budget for 6% of the purchase price.

    Once you have your estimates tallied up, as a double check, compare your total against the 6%.
     
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  4. nushydude

    nushydude Well-Known Member

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    Stamp duty - free for us as it is <600k property in VIC and we're first home buyers
    Deposit - figured out
    Loan repayments - monthly right? will come from my salary.
    Any improvements to make? hopefully not right from the beginning
    Council rates? Will look out for that. Will leave $1500 aside for that
    Break lease? 0
    Other inspections? Will leave another $1000 for that
    Council approvals? I hope nothing here
    Valuation report? Broker says bank valuation is free for our particular package.

    If electricity, gas, water, internet should be physically connected, how much could they cost roughly?

    Is that with the stamp duty or not?
    Because 6% is a big amount.

    If I tally up my estimates above it comes below $10,000, which is about 2.5% of the house we plan to buy.
     
  5. kierank

    kierank Well-Known Member

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    Yep, it includes Stamp Duty as S/D is a HUGE amount.

    For example, with my last purchase (an IP), purchase costs totalled 5.3% of the purchase price.

    The 0.7% not used was there as contingency.
     
  6. craigc

    craigc Well-Known Member

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    If this is an existing property (ie not new build) there are no connection fees as utilities will already be connected.
    Check the s32 will confirm this but pretty safe in a std residential area unless you are looking at a country property then may not be on water, sewerage etc.
     
  7. nushydude

    nushydude Well-Known Member

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    In the section 32, there is a section which indicates whether or not electricity, gas, water, sewer and telephone are connected to the land this part, right?
     
  8. Angel

    Angel Well-Known Member

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    If it is an established home, you might have to pay a small amount to the gas and electricity companies to turn it back on after the previous residents moved out. Allow maybe $100 per service required.
     
  9. craigc

    craigc Well-Known Member

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    That's it.
     
  10. nushydude

    nushydude Well-Known Member

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    Cool. All good. I will leave about 15k just to be on the safe side.
     
  11. korando1234

    korando1234 Well-Known Member

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    Furniture / appliances?
     
  12. nushydude

    nushydude Well-Known Member

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    They will have to be bought slowly sadly. And that is OK.

    But we have a lot of furniture and appliances we can reuse (two new beds, new fridge, new washing machine/dryer, two chest of drawers). All that is missing are a "new" sofa, dining table, tv stand and a TV. We can use the current sofa set for now. We will not be buying expensive stuff because we have two babies who are going to destroy them all - especially the sofa. :D

    Unless the valuation comes short (which I doubt because we are putting 20% in), we should have enough funds saved by the time of settlement.
     
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  13. The Y-man

    The Y-man Moderator Staff Member

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    Maybe you can take one of my sofas - it is at least 20 years old but it will be "new to you" :D

    The Y-man
     
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  14. Big Will

    Big Will Well-Known Member

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    if you are putting a 20% deposit in the valuer will pretty much agree your contract price is value.

    Unless of course you are paying 1M for a 500k place but even if it is 600k they will still value it at 600k even though it could be 500k.
     
  15. Marg4000

    Marg4000 Well-Known Member

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    And always allow a buffer of at least $1000. Things can and do go wrong at the most inconvenient time. Unless buying brand new (which brings its own extra expenses), something is bound to need attention in the first few months.
    Marg
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Under insurance is a problem so carefully consider cost to rebuild as well as replace all your contents....Lender will require a policy noting their interest before settlement.

    What Is Home and Contents Insurance & How Much Does It Cost?

    Other unexpected cost that pops up when borrowing 80% is a valuation shortfall esp in these days of more conservative lenders. You would need to make up 100% of any valuation shortfall if the lender maxes your loan at 80% LVR. Many lenders will take the contract price but not all.

    For example $500K purchase and you have a max 80% loan budgetted of $400K. If the val comes in at $480K then the lender will only lend $384,000 so you would need to find a further $16K to cover the gap to make up to $400K. Its why a contract "subject to finance approval" often needs to also address valuation shortfall.

    And then have some cash for contingency. You never know. When we moved in we found our old fridge would likely destroy new floors and was really too small from new larger kitchen etc and needed a new one. And a TV antenna (new build).

    Redirect mail from old address - Aus Post.
     
  17. nushydude

    nushydude Well-Known Member

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    But that doesn't sound logical. Say we borrow 400k of the 500k price of the property. The valuation comes in at 480k. If we default (i.e. sell the property and settle the loan), then the value is still way higher than what we owe the lender. :S

    Good point!
     
  18. nushydude

    nushydude Well-Known Member

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    That's sort of relieving. Sadly I am afraid we'd need more than 20% deposit when we look at the properties for sale and our limited borrow power.

    I will try to keep at least a $5000 buffer.
     
  19. The Y-man

    The Y-man Moderator Staff Member

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    It comes into the "risk calculation" of the loan. As you can appreciate, a $400k loan on a property that is worth $500k is less risky than a $400k loan on a $480k property. Specifically, there is more buffer for the property prices to fall. This is why the loans work on % LVR.
    Once banks go over 80% LVR on the loan, extra insurance is needed to protect the banks in case something bad happens (you the borrower pays for it by the way - called the Lender Mortgage Insurance - LMI).

    The Y-man
     
  20. purplecat

    purplecat Well-Known Member

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    You have babies, new place got air con? I recently found out that installation is expensive, usually around $800 for a typical $1500 split system :confused:
     

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