Budgeting For a First Home

Buying a first home is a huge investment, so it’s important to get the planning right. Many first home buyers underestimate the true cost of home ownership, and fail to budget for the extra costs they’ll incur when buying a first home. Setting a realistic budget is one way to get around this. To help you plan a budget for a first home, here are 3 important costs to keep in mind.

The cost of buying a home

These costs include the team of professionals who will help you navigate the finer details of buying a first home and some of the reports you’ll need to pay for. (Please note all costs quoted below are indicative only and will vary depending on a range of factors. We recommend you confirm all costs with the service provider.) These include:

Your lawyer or conveyancer: Because buying a home is a legal transaction, there’s a fair amount of paperwork that needs to be completed. Your lawyer or conveyancer will look over the contracts, explain your financial commitment, help you understand the loan documentation, and generally ensure that whatever you sign is right for you before you sign it. Expect to pay in the region of $1,500 - $3,000 for this service.

A building inspector: Having a professional builder go over the property before you commit to buying it is a good idea, as it could prevent costly surprises later on. Most professional building inspectors provide a written report of any issues or concerns about the property, so you’ll be able to estimate how much the repairs or maintenance will cost you. Budget for between $500 and $1,000 for a building inspection report.

A registered valuation: A registered property valuation is an independent assessment of a property’s market worth conducted by a registered valuer. A valuation will generally be required by your lender if you are borrowing more than 80% of the purchase price of a property. The registered valuation is based upon a full inspection of the property as well as the comparable sales data in the surrounding area. Expect to pay around $900 to $1,000 for a registered valuation.

Land Information Memorandum (LIM report): This report includes a summary of current property information held by the council, as well as rates, consent for work done, and any known land issues such flooding or subsidence. Depending on where you’re buying a home, expect to pay around $300 - $400 for a LIM report.

The cost of paying for a home

This one is an obvious one: your mortgage repayment is the regular payment you’ll make to your lender to repay your home loan. By working with a mortgage adviser who can help with applying for finance and structure your home loan, you’ll have a clear idea of how much you can expect to pay for your mortgage each month or fortnight.

Your mortgage adviser can also guide you and help you decide how much of your loan could be on a fixed interest rate and how much could be on a floating interest rate. What’s more, every year you may like to book in an annual review of your mortgage to ensure it’s still fit for purpose and that you’re getting the most suitable deal appropriate for you.

The cost of maintaining a home

Owning your own home means you’re responsible for ongoing bills and the general upkeep of your property. Some of the bills you can expect to pay when owning a home include:

Council rates: These fees go towards maintaining public infrastructure, services and facilities in your area, and will vary depending on where you live.

Body corporate fees: If you buy an apartment or unit, you’ll need to pay body corporate fees to help cover things like the upkeep of the building and its facilities, insurance and the cost of power in common areas.

Insurance: It’s important you protect your biggest asset from situations outside of your control and most lenders will require insurance cover to protect their investment.

Maintenance: Homes require upkeep and there are a number of things that can go wrong over time – from small things like leaking pipes, to larger issues like replacing a roof. Plan ahead and set up an emergency fund to cover these unexpected costs.

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