Purchasing costs sky-high
Fees associated with purchasing property can amount to almost double the minimum deposit, a financial comparison website has found.
The finder.com.au survey examined the cost of purchasing a property in every Australian capital.
“For a five percent deposit and purchasing an established home at the median dwelling price, the upfront cost is up to double the size of the deposit,” finder.com.au money expert Michelle Hutchison said.
According to the report, a buyer purchasing an established property with no stamp duty concessions at the national median price of $484,563 would be on the hook for a five per cent deposit of $24,228, home loan fees of $1,000 and stamp duty and lenders mortgage insurance (LMI) costs between $22,000 and $50,000.
Sydney was the most expensive market to enter, followed by Melbourne and Canberra, the report found.
In Sydney, with a median house price of $640,000, buyers would put down almost $24,603.50 in stamp duty, mortgage registration and transfer fees.
A further $32,000 would be required for the loan and $27,056 would be charged for LMI, although this cost can be capitalised into the loan amount in some cases.
By contrast, Hobart and Adelaide were among the cheapest cities when it came to purchasing costs.
Buyers in Hobart would pay a five per cent deposit of only $16,000 on the median price, with upfront fees coming in at $11,051.09 and LMI at $10,062.
Ms Hutchinson said saving a larger deposit could help ease the initial purchase costs as well as interest payments.
“Interestingly, saving a 20 percent deposit for the median Sydney home will cost $68,944 more upfront than a 5 percent deposit for an established home,” she said.
However, the larger deposit would attract lower interest payments, amounting to a saving of $207,000 over 30 years, according to Ms Hutchinson.
“So by saving more up front can make a huge difference to the cost of the mortgage over the life of the loan,” she said.