The Hidden Costs Of Property Investment
by Abdul Aziz Mondal Investing Published on: 18 July 2022 Last Updated on: 19 October 2024
Finally, do you have the means to achieve your lifelong dream of buying your own house? Shortlisted location and a few homes?
Buying a house is quite a milestone in people’s life.
Most buyers fix a budget when they begin the home buying process. What they often overlook are the additional costs that come with the cost on paper.
Buying a house isn’t all about getting loan approval and raising a deposit. There are several subsidiary costs that add on to the quoted price of the house which might feel minimal in individuality but once you add them up, they can cost you quite the fortune.
Therefore, to avoid monetary surprises and the mistakes that other buyers make, it is vital that you get acquainted with the hidden costs of property investment before you plunge in!
10 Hidden Costs Of The Property
Here we have enlisted 10 hidden costs of the property. We hope by the end of this article, you’ll have a better understanding of finances and be able to determine the perfect budget for home buying that takes into account the additional costs as well!
A] Real Estate Brokers Or Agents’ Commission
Today, in the highly competitive realty market, where homes are being sold in the blink of an eye, you just cannot commence the home buying process without a proficient, experienced, and knowledgeable realtor by your side.
The process of home buying can be very intimidating and tedious with house hunting, negotiating, conducting inspections, and so on. With a realtor, the process will be carried out smoothly as they are well-versed with the ins and outs of the procedure.
They can get you the best of what you need and what is available thereby becoming an essential part of home buying. Therefore, paying the realtor commission is going to be an unavoidable cost.
B] Legal Fees
Another professional you definitely need in the home buying process is an expert solicitor. Buying property is an expensive affair and if you end up making mistakes, they will most definitely be costly.
In order to prevent these, you need to hire a professional who will review the contract and help you with negotiations.
The fees of a solicitor can range between $1,000 and $3,000 and he will deal with all the legal tasks that will accompany your home buying process.
C] Stamp Duty And Government Fees
When transferring the property title, you as a buyer need to pay the stamp duty costs. These are directed by the state government so exclusions, concessions, and rates vary depending on your peculiar condition.
In Addition to the stamp duty, you also might have to pay other government fees like a title transfer fee and a mortgage registration fee.
D] Insurance
Home insurance is crucial in today’s times of uncertainty. It protects your house from burglaries, fires, floods, other natural disasters, and explosions. Landlord and building insurances both are required when buying a house and will vary in premiums and price. Many might skip on the insurance but remember it is imperative to ensure your asset.
E] Land Tax
This is the most common hidden cost that all buyers fall prey to. It is widely believed that personal residences don’t really have to pay land tax and are exempt from it.
However, this is not the scenario everywhere. The laws for land taxes differ from location to location so ensure you research rigorously and find out what applies to you to avoid a sudden financial strain.
F] Home Inspections
Home Inspections are very important before you seal the deal. If you skip on these you will not be aware of the defects in the house if any and once you buy and start residing at the house, the issues will pile up and put you under a financial and mental strain.
Standard inspection will give you an idea about the defects and if there are certain specific defects, you’ll have to get a particular additional inspection as well. All of this will add to your costs significantly.
G] Building-Related Costs
If you’re going to build your home from scratch, there are innumerable hidden costs that can be incurred including architect’s fees, surveyor’s fees, and council approval costs. For an average family home, this will range between $10,000 to $15,000.
H] Rental Listing
If you want to list your house for rental availability, you’ll have to spend around one week’s rent with the GST to find tenants. If between two tenants your property is vacant, you’ll have to cover the management and mortgage interest costs.
If you are an experienced buyer, you already must be aware of some of these but as a novice buyer, you probably might be staggered by how exorbitant buying a house can be. All in all, do not be tricked by the cost of property on paper; hidden costs of property are complementary to the home buying process.
Some hidden costs are inescapable and frequent, others can show up occasionally and are unpredictable. So, no matter how they are, it is always good to be prepared to carry them forward without stress.
Investing in a property is a big decision, make sure there are no confusion and hidden costs.
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