All the extra costs you need to know about when buying a home

Written by Money Empire

September 6, 2019

Buying a home costs more than the purchase price. There are countless extra expenses that will come up before and after a property purchase, all of which can cause a huge headache if they’re not properly planned for

To make sure you know exactly what to expect, we’ve put together a list of all the extras to watch out for when buying a home. 

Before purchasing your home

Search costs: 3 to 30 days +

When you buy a home you’ll spend days searching the internet and open homes to find the perfect place. While this may not cost you money (aside from travel and internet costs), it’ll cost you a lot of time. You may even need to take a few days off work to attend some open homes.

Conveyancing: $1,000 to $3,000+

Before you’ve chosen a property, you should select a specialist property lawyer (or conveyancer). A good lawyer is vital to look over the property’s title and the sale and purchase contract to ensure everything is as it should be. They will also handle the transfer of the property and help with applications for grants and accessing your Kiwisaver. 

Land Information Memorandum Report (LIM): $304 in Auckland, $200 to $400 elsewhere

A LIM is a comprehensive report including all the information the council has about a property or section. This should include information on public stormwater, drainage, rates, consents, notice orders or requisitions that affect the property. It’s essential that you inspect this (or have your lawyer check it) before purchasing so that you know what you’re getting into. 

Building inspection: $400 to $1,200

Before you buy a home, you need to know of any issues the home has so a building inspection is a must. Make sure you use a reputable company and ensure that the inspector looks under your home at the piles if the area is accessible. 

Insurance: $1,000 plus and depending on property location and size. 

Your lender will require that you take out a house insurance policy before they approve your finance. It’s also essential for your own financial security and peace of mind. 

Mortgage application fees: $400-$500

Most lenders will charge you a fee for processing your application and approving your loan. Make sure you know what this fee is before you sign on the dotted line. 

LMI: $1,750 to $3,500 on a $350,000 loan

If you’ve got less than a 20% deposit then you may have to pay lender’s mortgage insurance (LMI). This is a one-off cost that insures your lender in the event that you default on your mortgage. Remember, the bigger your mortgage is, the higher the cost will be.

Valuations: Usually between $500 to $800 depending on property location and size

Your lender may require a valuation to prove the value of the house that you’re purchasing. Usually, you are responsible for this cost. 

After purchasing your home

Utility connection fees: $50 to $300

Electricity, gas and internet providers may charge a fee to connect you to their services. 

Body corporate: On average $5,000/year in Auckland

If you buy a unit or apartment, there’s a good chance that you’ll have to pay body corp fees. These go to the organisation that manages the building’s shared areas to pay for upkeep and other costs. 

Move-in costs: Same city = $500 to $1500. Intercity = up to $5,000.

This cost can quickly balloon if you have a large house with lots of furniture or if you’re moving inter-city or internationally. Make sure you budget for it before the move. 

Rates: The average in Auckland is $2,636

Rates are the tax we pay to our local council to maintain essential services like roads, rubbish collection, drainage, sewerage, city planning, public transport and more. 

Repairs: A good rule of thumb is to set aside 1% of your property’s value for repairs

Unfortunately, thanks to rough weather, time and everyday life your home will require repairs from time to time. To start planning for all the financial hurdles you’ll have to jump through, get in touch with the experts here at Money Empire. We’re here to help with every aspect of your purchase, from saving your deposit and budgeting to purchasing insurance and securing finance.

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