Everywhere I look, there are adverts attempting to convince me that I can own a new home for as little as 10% deposit. I cringe every time I see it, because not only it the statement misleading, it has the potential to financially impact those who ‘take the bait’.

To counter this claim, I have broken down the costs of buying a home, so you can see why the 10% deposit just doesn’t cut it. When purchasing a property, the following costs are required to be paid in addition to the deposit:

Land Transfer Stamp Duty
Land Transfer Registration
Mortgage Registration Fee

For example, recently a client of mine saved $80,000 and was looking to purchase an existing home for $800,000 in a leafy Melbourne bayside suburb. This purchase attracted the following costs:

Land Transfer stamp duty: $43,070
Land transfer registration: $1,971
Mortgage registration: $120

That’s a total of $45,161 in costs, leaving less than $35,000 for a deposit. This equates to less than 5%, which made getting a loan for this property very difficult. However, it is possible some of these costs can be avoided or at least minimised, provided it is your first home purchase or the purchase price is under a certain threshold.

So, if you are looking at your next property, remember to consider all possible fees and costs that need to be factored into your purchase. To find out if you are entitled to an exemption, its best to contact your mortgage broker and get them to provide you with the anticipated costs. I just so happen to be an expert in this area, so please, if you find yourself searching the various real estate websites, get in touch so we can drive your deposit further.

Speak soon,
Michael De George