Property Guideline

Costs of Buying a House in South Australia – A Complete Guide [2024]

Buying a house in South Australia costs a considerable amount of money and it’s important you don’t get into financial trouble when you do it. A failure to keep up repayments on the property may result in you losing it so the implications are very severe.

Before you commit yourself to anything, you need to seriously consider the costs involved in buying a house in South Australia. These are not only the upfront costs associated with the purchase but also ongoing costs that may vary over time and will continue while you live there. It’s important that you set out a budget and that you stick to it, so you avoid financial problems.

The Up-front Cost of Buying a House in South Australia

When buying a house, it’s extremely unlikely you’ll be paying cash but will instead require a loan to fund the purchase. Securing that loan is essential for you to be able to sign a contract for a property so you ideally need to obtain finance pre-approval that will help establish you as a credible buyer. Mortgages and home loans have different features and the ones you choose will affect the amount you have to repay each month:

  • The most common type of loan repays, over a period of 25 or 30 years, the principal (the amount borrowed) and the interest added. Interest-only loans pay off the interest but not the principal so have lower repayment amounts but require the principal to be repaid at some point.
  • Fixed-interest loans have the interest rate fixed for a set period (typically three years) so you have the certainty that the amount you repay won’t vary over that time but there may be a fee if you cancel before the end of the period. Variable rate loans alter the rate with market conditions so repayments can go up or down although the terms may be more flexible, and they’re more easily cancelled. You can sometimes have a split loan with fixed and variable elements.
  • Offset loans are linked to saving accounts, so you only pay interest on the net balance between the two. These encourage savings and reduce interest costs.
  • Redraw loans allow extra repayments to be made and access to funds.

A loan consultant or mortgage broker will advise which is best for you and their fee is often covered by the lender. Once you organise your mortgage, you’ll know what your monthly repayments will be, at least at the start. You’ll also know the deposit you’re expected to pay on the property, which is likely to be your largest upfront cost.

In general, the upfront cost of buying a house in South Australia is likely to comprise:

  • The deposit, which can be anything from 2% to 20% of the purchase price. A bigger deposit demonstrates you have saved and will make a loan approval more likely. However, studies show that those with an average income can take up to eleven years to save a 20% deposit so a government-assisted loan, such as the Home Guarantee Scheme, can provide a low deposit alternative.
  • Lender’s mortgage insurance may be required where a 20% deposit is not payable and can cost several thousand dollars unless you can avoid it by taking out a government-assisted loan.
  • Stamp duty and other government charges are payable and vary depending on the value of your property.
  • Loan title office fees and title search fees.
  • Building and pest inspections are essential since you need to be sure the property is sound and free from infestations. Costs of up to $700 are likely.
  • Loan establishment fees, legal costs and conveyancing fees are applicable and can add anything up to $3,000.
  • Moving costs, which will vary depending on what you have to move and how far.

For a $400,000 property, a 20% deposit will require $80,000 while the lender’s mortgage insurance is payable if this cannot be achieved, and a government-assisted loan is not available. All other charges can amount to almost $30,000 and possibly more. So you need to ensure you have the money available before you start although you may be eligible for a $15,000 First Home Owner Grant if you’re a first-time buyer of a new property and stamp duty relief may also be available.

If the figures show you can’t really afford your first choice of home, you may have to make compromises. Look for a property in a cheaper area and consider a smaller house. An existing house may also not have as many fit-out costs as a new home although repairs will be more common.

On-going Costs of Buying a House in South Australia

Once you’ve bought the property and moved in, you will have costs that recur every month. The biggest of these will likely be the mortgage repayment and it’s essential you are able to pay this. Failure to do so can eventually lead to repossession of your home and cause an adverse effect on your credit rating so repayment is a priority.

In addition to the mortgage repayment, you’ll also have:

  • Insurance for the property
  • Council and strata fees if buying a townhouse or unit
  • Emergency services levy
  • Food, transport and general living expenses
  • Maintenance costs, which will increase over time
  • Electricity and gas costs
  • Internet costs

When budgeting for living expenses, add in a contingency amount because costs can rise unexpectedly, particularly your mortgage repayments if rates go up on a variable loan, and you don’t want to be caught out. Also, add in an amount for holidays and recreation if possible because ideally you want a life outside your new home.

Buying a new house is exciting but it can turn into a nightmare if you find out too late that you can’t afford it. So budget carefully for both up-front and ongoing costs, add in amounts for safety and then stick to your budget where possible. Then it truly will be your dream home.

Blackwood & Belair Conveyancing helps navigate the complexities of buying a house in South Australia. Our expert team, with over 30 years of experience, ensures your conveyancing process is smooth and stress-free.

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