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First home buyer’s guide - Part 1: Industry terms demystified

Buying your first home can become a confusing experience if you’re not familiar with the process or the financial and industry jargon.  Here’s a list of terms that you’ll need to know as a first home buyer:

1. Home loan applications

There are a number of application related fees to consider after you’ve been approved for a mortgage.

Financial lenders regularly charge a home loan application fee when you apply for a loan and there will inevitably be other costs involved once you progress past the application stage.

You'll also be asked to sign a contract in order to buy your first home, which is all part of preparing and registering a mortgage.

At this stage you will need to pay conveyancing fees in order to prepare and finalise your sales contract, mortgage and other related legal documents.

Valuation fees

During the home loan application process, your lender can charge a valuation fee in order to get a formal estimate of how much your home is worth.

This is usually done by lenders as an insurance formality, in order to check whether the value of your home will cover the overall cost of the loan.

Mortgage Insurance

This is an insurance policy that covers lenders in case there is a default on the home loan. You will most likely be asked to take out mortgage insurance if you are borrowing more from your lender than what your property was valued at.

Survey reports

This is a record of what buildings and other structures are on the land that you are purchasing.  The survey diagrams in the report detail the boundaries and outlines of buildings close to your block of land and is usually requested by lenders for their records.

2. Conveyancing fees

These are the legal fees associated with transferring the property from the seller - to you - as the buyer. This can be done through a solicitor or a conveyancer but the cost can vary depending on which firm you decide to go with, so it’s best to get a written estimate before proceeding.

Disbursements

During the conveyancing process your solicitor or conveyancer may also charge for other expenses in order to finalise your contract.

These expenses can include title searches, local council rates, certificates, outstanding notices and applications, water and drainage diagrams, land taxes, electricity or power station costs and more.

3. Transfer / Stamp Duty

Stamp duty in Queensland is now called ‘Transfer Duty’.

Transfer duty is a tax paid to the Government for certain transactions, including mortgages, transfers of property and land acquisitions.

According to the Australian Tax Office, “The rate of stamp duty varies according to the type and value of the transaction involved”.

“Depending on the nature of the transaction, certain concessions and exemptions may be available.”

There are concessions available for first home buyers and first vacant land buyers in Queensland that discount the cost of transfer duty that you will need to pay.

At the moment there is no Transfer Duty to pay for first home buyers in Queensland who are looking to purchase a home under $600,000. The latest details on Transfer Duty for first home buyers can be found on the Queensland Treasury website.

More information on Transfer Duty Concessions is available from the Office of State Revenue website.

4. Inspection fees

Building, pest and strata inspections fees may apply depending on the type of home you are planning to buy.

These inspections must be carried out before the final stage of the mortgage process. This final stage in the home loan process is called settlement.

Building inspections check for structural soundness and any defects in your new home that may need to be repaired, while pest inspections check for any infestations.

A strata inspection is a report compiled for you that holds a record of strata levies, titles, insurances and the history of your building, in addition to the certificate supplied to you by the seller.

 

5.  Saving on contruction costs

The total cost of buying a home is actually cheaper if you apply for the First Home Buyers Grant in addition to the Queensland Building Boost Grant.

By combining both grants you could stand to save up to $17,000 on construction costs.

Indigo Homes also offers its own $4,000 cash back offer in conjunction with the Queensland Building Boost Grant, which means a total of $21,000 in savings on construction costs when you build with us.

To find out more about the Queensland Building Boost Grant and the Indigo Homes cash back offer please subscribe to our newsletter or click on the links above for more information.

If you want to get up to speed on all the steps involved in building a new home, including who’s responsible for what and the typical timeframes, download our No Suprises Building Book for a comprehensive guide to what you can expect as a first home buyer.