Your top home loan questions revealed - and answered
Finding a dream property that also sits within your means is no easy feat, and for 1 in 2 Australian home buyers, the whole process ends up being so stressful that it strains their mental health.
This is according to recent Allianz research which found 55% of Australians would rather extend their stay at their current house than start searching for a new one - just so they can avoid that stress altogether.
Almost 1 in 5 respondents said they would choose going social media free for a month over joining the housing market.
But Allianz Australia’s General Manager of Home and Lifestyle, Rachael Poole, said home buying could feel a lot less like a burden once you’ve worked out and planned your finances around purchasing a property.
“To help manage the stress, many homeowners tell us they wished they had known more about the additional costs involved in buying a house, and had a better understanding of what was realistic for their budget, from the outset,” Poole said.
“Bearing this in mind, prospective buyers can reduce potential stress by better understanding the end-to-end costs of purchasing a property and what they are willing to compromise.”
Home buyers checklist: things to know before diving into the market
Taking a closer look, here are five top things that survey respondents said they wished they had a better idea of:
1. Which properties they could afford (14.2%)
Property prices vary from city to city. According to new Mozo research, Sydney is 70% more expensive than Perth in terms of the costs that come with purchasing a property. That is, Sydneysiders have to pay $50,000 on average to seal the deal compared to just under $29,000 for Perthians.
So for those looking to settle down in Perth, you’re in luck - this city is the most affordable metropolitan area in Australia.
To work out how much you can afford to borrow, jump over to our home loans borrowing calculator.
2. How long buying a house would take (14.6%)
Home buying doesn’t take nearly as long as one may think, with the Allianz survey revealing that almost 50% of respondents found and purchased their house within 6 months. Another 18% completed the whole process, from start to finish, in just 3 months.
3. Extra costs to look out for (20.5%)
With the additional fees of buying a home eating an average $40,000 out of Aussie budgets, Property Expert Steve Jovcevski said being ready for all these invisible costs ensures your bank account won’t be stung by nasty surprises down the track.
“Associated costs are nearly always in the tens of thousands of dollars so it’s certainly not loose change to be sneezed at.”
Some major costs include:
- Buyers agent: While paying for a buyers agent isn’t mandatory, having one by your side will put you at an advantage in a competitive housing market, as the agent not only has market insight but can also help you negotiate down prices and even bid for you at auctions.
- Lenders mortgage insurance: If you’ve saved up less than a 20% deposit before taking out a home loan (with a loan to value ratio of over 80%), then you’ll have to pay lenders mortgage insurance, since you’re considered a riskier borrower. This could add up to thousands of dollars.
- Stamp duty: You’ll be required to pay this one-off government fee once you’ve purchased your new home. A large part of this cost depends on your property value and whether you’ve taken out an investment loan or owner-occupier home loan.
4. Moving costs (11.3%)
Mozo data shows that no matter the city, moving on average costs $3,000 - so be sure to factor that into your budget!
If you’re looking to save money in this department, consider going DIY instead of hiring removalists to do the job. This means packing and unpacking your possessions yourself, or hiring a truck or using your own vehicle to transport everything from your old home to your new one.
5. Stamp duty costs (9%)
Depending on which city you live in, stamp duty will differ quite significantly. Mozo data shows that stamp duty is around $30,000 on average in Sydney, Melbourne and Canberra, while in Perth and Hobart, it’s about half this cost.
Since every home buyer will pay a different stamp duty, it’s a good idea to budget for a higher amount - just in case. Check out our stamp duty calculator for an estimate of how much stamp duty you may have to pay on your property.
Ready to begin your search for a new house? Head over to our home loans comparison table to compare your options and get started on property hunting today!