Related costs of purchasing a property
- 01 Nov 2021
- First Home Buyer
1. Booking fee and admin fee.
These fees are normally applicable for off-the-plan or new property purchases from developers. The booking fee is usually between $2,000 - $5,000 and is refundable, meaning that if you don't buy it, the booking fee will be refunded. This fee normally goes into your part of your 10% deposit when you decide to continue with the purchase. There are developers who apply non-refundable administration fees. The amount is usually relatively smaller, like $500.
For existing property, you normally need to put a holding fee of 0.25% of the property price. This fee is also refundable unless you sign and exchange the contract with cooling off. If for whatever reason you decide not to go ahead with the purchase, then the 0.25% will be forfeited.
2. Solicitor or conveyancing fees.
In Australia, a solicitor or conveyancer acts as the purchaser's legal representative. Their role is to read and check the contract of sales and if applicable, additional deed of sale and purchase.
The average cost is between $1,500 - 2,500. Usually, the higher the property price the higher the solicitor/conveyancing fee is, for example, multimillion-dollar properties.
3. Stamp Duty or purchase tax/transfer tax
The amount of stamp duty that must be paid varies between states and the amount depends on the property value.
For foreign nationals, there will be Stamp Duty Surcharge that is different from local buyers. The average stamp duty value that must be paid by foreign nationals is around 13% (local stamp duty + stamp duty surcharge for foreigners)
For first home buyers (Australian citizen/permanent resident only), there is some scheme running by the state government that can give exemption on stamp duty payment. The amounts of threshold are different between states.
4. Application fee for Foreign Investment Review Board (FIRB).
Foreign Nationals must obtain a permit from the FIRB to be able to purchase property in Australia. Starting 1st July 2021 the application fee will be $6,350 for properties under $1 million.
5. Application fee to get a mortgage.
Please check with your financial institution in regards to this fee, some lenders can waive the application fee.
6. LMI or lender Mortgage Insurance.
If you borrow more than 80% of the property value, the lender will ask the borrower to pay for the LMI. This additional cost needs to be accounted for when you plan to buy property.
7. Other things that need to be considered that will add to the cost of purchasing your property are:
pest control inspection
and strata report inspection.