The idea of buying your first home is incredibly exciting. Rather than wasting money on rent, you can actually own your own space, decorate however you like, and build your forever home.
But what does it actually cost?
Those that say ‘buying is cheaper than renting’ are somewhat naïve as without a large lump sum to start with, you’re unlikely to get far with a lender.
There’s also a number of other costs involved in the buying process which nobody really tells you about.
So, here’s all the things you’ll need to be prepared to pay for when buying a house.
As you probably know, one of the highest costs when buying a house is the down payment. You’ll be expected to pay a deposit of anywhere between 1%-20% of the asking price. That being said, it’s unlikely you’ll be accepted by a mortgage company with 0% saved.
This is the major part you’ll need to save up for. You can find tips on how to save for your down payment here.
To replace your rent, you’ll be paying back your mortgage – with interest – monthly. When finding a lender, try to find the lowest interest rates with a fixed rate.
To understand how much you are likely to be able to afford, you can use an online affordability calculator.
This is just one of the hidden costs when buying a house. Closing costs cover the price of inspections to check property value, taxes, and admin. One tax you’ll need to pay is a property transfer tax. This is typically 1.5% of the asking price.
Using a solicitor is a really good idea if you’re a first-time buyer. They’ll make sure to look through all the paperwork and contracts before you sign. But, naturally, they’ll come at a price. Legal fees can be anything from $400-$2000.
If you used an estate agent to help you find your home and process the offer, you would be required to pay a commission when the deal is closed.
Your home will likely have everything you own in it! Therefore, it’s vital to get homeowners insurance to cover you for any damages to the structure and interior of the house, as well as your furniture and belongings.
Unless you can manage with the car, you might need to hire a removal van. There’ll also be any home renovations you want to make or storage costs if the house is smaller than your rented accommodation.
So, there are a lot of costs involved with buying a house – that aren’t just included in the price of the property itself. But it’s important to remember that buying a house is a really big and really exciting step in life. It might seem a bit doom and gloom when looking at all the finance required, but once all the setup is done, you’ll have your forever home! For more help, visit your local government site to find out more about the process.