Costs to be aware of when buying property
Financial preparation is one of the most important stages of buying real estate in Australia. Aside from using a home loan calculator to figure out how much you can afford to borrow, there are various other costs you will also need to factor in.
Recent figures from the Australian Bureau of Statistics (ABS) showed that the average household spends around 16 per cent of its income on housing costs. Low income households spend around $326 per week paying off a mortgage, which is incidentally less than the 34 per cent paid to a private landlord.
So once you’ve accounted for your mortgage each month, what other expenses do you need to consider?
Gas and electricity costs are something else you need to include in your calculations. ABS data shows that back in 2012, Australian households spent an average of $99 per week on energy, with $39 of this dedicated to electricity and gas. The rest refers to fuel for vehicles.
Prices have generally been rising over recent years, and unless you’ve opted to generate your own power through solar panels or suchlike, chances are your bills are going to increase.
If you’ve bought real estate in Australia that’s part of a strata scheme, it’s likely you will be faced with some sort of fee. This is generally used for the upkeep of public areas and should be outlined in your contract.
This is something you need to look into closely before viewing any strata homes for sale. Otherwise, you could find your monthly expenses are higher than you expected.
Lenders’ mortgage insurance
The main reason you’re advised to save more than 20 per cent of a property’s value as a deposit is because otherwise you’ll be faced with lenders’ mortgage insurance. This is designed to protect your lender in the event you fall behind with repayments on your loan.
The average household spends around 16 per cent of its income on housing costs
The amount you pay will depend on how much the property is valued at. Speak to your lender if you’re unsure whether this fee will apply to your particular purchase.
Helping you find a property in your price range
Of course, one way to keep costs down is to buy a property that’s within your budget. This is where an experienced real estate agent can prove useful, as they’ll know the type of real estate you can buy within your range.
Ray White has offices throughout the country, so you can rest assured there will be plenty of local knowledge on hand to help you make the right choice. Get in touch today to find out more about making those first steps onto the property ladder.