One way to reduce some of the stress of finding and owning your first home is to plan ahead for the extra costs involved. That way there’ll be less chance of nasty surprises that blow your budget and ruin the fun.
Everyone has their eye on mortgage repayments, but there are other expenses to also consider. Some start before you’ve even bought a home, while others are simply part of moving in. And then there are the ongoing costs of owning a home and making it yours.
The costs of finding a house to buy
Flicking through the latest house ads and touring the open homes can be great free entertainment. But once you find a place you’d like to own, the inspections and checks associated with due diligence start to mount up. If you’re negotiating to buy, you can usually make your offer subject to satisfactory outcomes from each inspection or check. That way you can agree on a sale price before spending money on them. However, your conditions might reduce the appeal of your offer. If you’re buying at auction, which is typically an unconditional sale, it’s smart to get your due diligence list ticked off before you raise your hand to bid.
What does a house inspection cost?
Given the cost of a new home, getting a pre-purchase builder’s inspection is almost a must. There are bound to be some things that will need attention, but at least you’ll know what they are. That means you can negotiate on the price or adjust your budget to get issues fixed before they turn into major problems.
A builder’s inspection can cost anywhere between $400 and $1,000+. It just depends on the property and how long it will take. Being onsite during the inspection can help you understand any issues, but it will usually cost more because of the extra time involved. These days building inspections can also include a meth test, to ensure the property is free from methamphetamine contamination caused by meth users and/or manufacturers.
Vendors or their agents sometimes provide a builder’s report as part of the house sale information. While this might be useful as an initial guide, it’s usually recommended that you get your own. If the report misses something, you probably won’t have any comeback unless you’re the one paying the inspector.
What is a LIM and what does it cost?
How much does a lawyer cost when you’re buying a house?
There’s a lot of legal paperwork involved, so it’s important to get a lawyer or conveyancer involved. The earlier you do this the better, even if it’s just to let them know your plans. They may be able to give you some handy tips. It’s important that your lawyer approves and explains any agreement before you sign it. If you decide to make an offer without first consulting your lawyer, you should at least make it subject to your lawyer approving the sale and purchase agreement.
A very basic service of checking the property title, handling the legal title transfer and arranging settlement of funds from your mortgage lender to the seller will cost at least $300. More complex sales and greater legal advice can see legal expenses of much more, so be sure to get an estimate and description of proposed services before engaging your lawyer.
How much is a registered valuation for a house?
Apart from helping you to confidently make an offer or bid on a property, a registered valuation is usually required by your mortgage lender. The amount they’re prepared to lend will depend on the valuation. If you don’t manage to get it done before you sign a sale and purchase agreement, you can make your offer subject to a suitable registered valuation and finance approval. If you’re buying at auction, you’ll need to have a valuation and approved finance before you bid.
Your mortgage provider may arrange a valuation for you and who pays the fee may be negotiable. The average price for a valuation is around $1,000. More expensive homes tend to have a higher valuation fee.
The costs of moving into a new home
Once you’ve successfully purchased a new home, the next round of costs typically arrive on or near the day you move in. Here are a few of the main expenses:
Furniture removal costs
The cost of moving furniture can vary widely. If you need a moving company, most will be happy to give you a quote, so shopping around ahead of time is definitely a good idea. However you plan to move your belongings, be sure to check your insurance cover for road accidents and damage while packing, unpacking and in transit.
Commercial cleaning cost when moving house
Security and locksmith
Additional furniture and appliances
The ongoing costs of owning a home
Additional furniture and appliances
Before they let you draw down the money to pay for your new home, your mortgage provider will probably want to see evidence that you’ve arranged house insurance from the settlement day onwards. It’s a good idea to get this sorted early as insurers can require electrical inspections and other details, particularly for older homes. As a rough guide, home and contents insurance usually costs $1,500 to $2,000 a year. It’s easy to get a quote and many insurers let you do this online. You could also consider mortgage repayment insurance.
Body corporate fees
You’ll definitely have these on your radar. Be sure to allow for the possibility of interest rates rising. Mortgage lenders will typically use a higher rate when working out what you can afford. To explore the repayments on different mortgage arrangements, see our handy mortgage repayments calculator.
To learn more:
- To create a budget and plan for your mortgage, see our budget planner calculator
- To get an idea of your mortgage borrowing potential, see our borrowing power calculator
- For helpful information on buying your first home, see our first home buyer’s guide
- You may also be interested in our complete guide to first home loan grants and KiwiSaver