Etheringtons Solicitors Note: In June 2022, the NSW Government announced legislation to reform transfer duty within NSW, moving to an ‘annual property tax’ system. These changes will take place over a number of years. For more information, click here.
If you are currently in the process of buying, looking or saving for a house, there are extra costs beyond the property’s price tag that you need to know about.
1. Transfer duty (previously known as stamp duty)
When you purchase a property in NSW, you are required to pay transfer duty. This is a tax on property which varies depending on the value of the property. Generally, the more expensive the property you are purchasing, the more transfer duty you will pay. Transfer duty must typically be paid with 30 days of settlement, and may be a big upfront cost. It is important to factor your transfer duty costs into the other upfront costs you will need to make.
Some websites will help you calculate an estimate for what your transfer duty will be, to help you plan.
2. Pest and building inspections
Before purchasing property, it is recommended that you have pest and building inspections to determine the property’s condition. These inspections are especially important for older properties which might have long term problems that are not evident in a general inspection. Make sure you appoint a qualified person such as a licensed builder, surveyor or architect.
3. Mortgage registration
You are required to pay a fee to formally register your mortgage in NSW. This mortgage registration payment is required by the state government to register the security for a home loan. This is important as it allows any potential buyers to check claims against the title of your property.
4. Loan application or establishment fee
When you take out a home loan, you may be required to pay an establishment fee. However, some lenders will waive this fee, so it is worthwhile to around and see what your options are.
5. Mortgage insurance
If you are borrowing more than 80% of the property value, you may be required to pay ‘Lenders Mortgage Insurance’ (LMI). The lender’s valuation of the property determines this fee.
It is important that buyers are aware of any additional costs which may be required when purchasing a property. If you have any questions or concerns, we can provide additional information and advice to you regarding your situation. If you would like to discuss your concerns with a legal professional please contact us on (02) 9963 9800 or via our contact form.