Why First Home Buyers Must Budget for More Than a Mortgage

Purchasing as a first home buyer

For many first home buyers, the struggle to break into the property market is real. Even though the number of first home buyers breaking into the market has increased to 18 percent, it is taking many people longer to achieve their dream, with the average age of first home buyers increasing to 32. With so much emphasis placed on saving up a decent deposit to acquire an asset (and potentially avoid paying Lenders Mortgage Insurance (LMI), it's easy to be blindsided by the extra costs that first home buyers must pay in addition to paying off their new-found home loan. Here are the extra costs you can expect to come out of your wallet once you’ve acquired your first asset:

Stamp Duty

Outside of your mortgage, stamp duty will be the biggest expense that you will need to budget for. Stamp duty varies from state-to-state, you can check our stamp duty calculator for details on any concessions applicable to your stamp duty or speak with an Inovayt mortgage broker for further information.

Insurance

Footing the bill for home insurance for your new property is non-negotiable. Whether you’ve built your home or moved into an established property, it’s essential that you take out home and contents insurance - It's Important to ensure your policy starts from the exact date that you pick up your keys. Tip: Try saving up for the annual insurance amount if possible as most companies will provide you with a discount if you pay your premium annually (as opposed to setting up monthly direct debits). Furniture You’ve worked hard for your home and while it’s not necessary to have an interior decorator on-hand as you move in, you will inevitably need something to sit on as well as somewhere to store your belongings. Furniture is often an after-thought when it comes to saving for a property, but you’ll be surprised how many pieces of furniture you’ll need (and how quickly the costs add up) once you move in. If you’re budget-conscious, monitor online bargain platforms such as Facebook marketplace, Gumtree or eBay for frugal furniture finds. Landscaping and fencing If you’ve built a new home, it’s likely you’ve been caught up in the excitement of choosing colour palettes and benchtop materials. Give some thought to the outside of your home too – such as landscaping and fencing costs which often aren’t included in the cost of newly built homes. It’s best to budget for these new expenses before you move in by getting quotes for driveways, landscaping, and fencing while you’re still saving for your deposit. Landscaping costs can spiral into thousands of dollars depending on the work you’re after, while driveways are usually charged by the concrete and per area size. To help cut costs, you can also contact your local Council and write a letter to your new neighbours to request they share the cost of your new fence.

Pest and building inspection

A pest and building inspection is recommended when purchasing a property to ensure the property is free from any major structural or pest-related problems. The inspection can identify potential issues such as termite damage, asbestos, water damage, and electrical faults, which can help the buyer make an informed decision about the property and potentially negotiate a better price. The cost of a pest and building inspection varies depending on the size of the property and the complexity of the inspection but typically ranges from $300 to $700. It's important to choose a qualified and experienced inspector who is a member of a professional organisation, such as the Australian Institute of Building Surveyors or the Royal Australian Chemical Institute.

Moving costs:

When it comes to moving, it's important to understand and budget for the various expenses involved. Here is a breakdown of common moving costs along with estimated cost ranges:

1. Removalist: This refers to the cost of hiring a professional moving company to handle the physical transfer of your belongings. The cost can range from $500 to $2000, based on factors such as the size of your move, the distance, and the level of service you require.
2. Packing materials: This includes items like boxes, tape, bubble wrap, and other supplies used to pack your belongings safely. The estimated cost of packing materials can be between $50 to $150.
3. Storage: If you need to store your belongings temporarily, you'll need to budget for storage fees. These can range from $50 to $300 per month, depending on the size of the storage unit and location.
4. Transportation: If you need to move a car, you can expect transportation costs ranging from $500 to $1000, based on the distance and the type of vehicle.
5. Cleaning: End-of-lease cleaning may be required when leaving a rental property and can cost between $200 to $500, depending on the size of the property.

It's recommended to get quotes from multiple removalist companies, compares the costs of packing materials and storage, and consider any additional services offered, such as packing and unpacking, which can impact the overall cost of your move. Please keep in mind that these are rough estimates and the actual expenses may vary depending on your specific circumstances. By taking these costs into consideration, you can ensure a smooth and stress-free moving experience.

Rates

While you may have factored in your new mortgage repayments into your budget, you will need to keep in mind that being a homeowner also comes with the responsibility of paying Council rates. Council rates are a mandatory charge and while each local government area is different, your rate amount will be based on a valuation of your property. Whether you’re a first home buyer or need information about refinancing, the experts at Inovayt Finance will help you to make the right decision by finding the most competitive loan that matches your individual needs. Book a free meeting today with an Inovayt mortgage broker to discuss how you can best prepare for the extra costs that you will encounter once you get the keys to your first home.