How much money do you actually need to buy a house?

A recurring issue I find when I’m dealing with the settlement of a property is that people underestimate how much they need on hand to purchase a home.

Let’s break it down for you.

1. Offer: You’ll need cash to place a deposit on the property when your offer is accepted. This can be anywhere from $2,000 to $20,000, depending on the asking price. This is usually a negotiable amount. This amount will later be deducted from the total sale price.
2. Deposit: You’ll also require a deposit for the bank. This is usually a minimum of 10%. The more you have, the more you can likely borrow. If you want to avoid LMI (lender’s mortgage insurance), you’ll need over 20% of the purchase price available as a deposit.
3. Inspection: While you don’t need to have your potential property inspected prior to purchasing, it’s a very good idea to. You’ll need to hire a professional building inspector to review the property top to bottom. Skipping this could cause a massive headache down the track.
4. Settlement fees: You’re settlement agent will charge you for their services, but there’s other fees to consider as well.
5. More settlement fees: Council rates, strata rates, mortgage registration, land titles and bills such as water need to be paid before the settlement is finalised. Your agent will handle all of this, but don’t be surprised if there’s an extra few grand in fees required.
6. Stamp duty: In WA stamp duty (also known as transfer duty) is a tax on buying property. The rate depends on the price of the property. This usually needs to be paid within a month of the property being purchased.
7. Moving costs: This includes establishment fees for your utilities, the removal van and anything else you may need to get started.

Purchasing a house is no small thing! Make sure that you’re prepared for the costs involved before you dive into the process.

And make sure you have a good settlement agent, like me, lined up to walk you through the process.