Holding cost of a property
06 Apr 2023
For the new entrants in the property, ongoing cost for owning their own home or an investment property is always a concern. Whilst mortgage is generally the biggest cost element in most cases, there are other holding costs one needs to keep in mind during the planning process. The holding cost of a residential property in Australia can vary depending on several factors, including the location, size, and condition of the property, as well as the current market conditions. The following are some of the main costs associated with holding a residential property in Australia:
For all properties:
- Mortgage payments: The cost of the mortgage, including the principal and interest, is the main cost associated with holding a residential property. The interest rate, loan term, and the amount borrowed will all affect the cost of the mortgage.
- Insurance: It is important to have insurance for a property in Australia, this includes building and contents insurance, as well as liability insurance.
- Property taxes: Property taxes, such as council rates, are typically based on the value of the property and are paid annually.
- Maintenance and repairs: Regular maintenance and repairs are required to keep the property in good condition. This can include things like painting, landscaping, and repairs to appliances, heating and cooling systems, and other fixtures.
- Utilities: The cost of utilities, such as electricity, gas, and water, will depend on usage and the size of the property.
- Strata fees: If the property is a unit, townhouse or apartment, there will be strata fees, which are fees for common area maintenance, insurance, and management.
For investment properties:
- Vacancy costs: If the property is vacant for a period of time, there will be no rental income to offset these costs.
- Property management fees: If the property is rented out, there will be property management fees, which can be between 6 to 12% of the rent.
It is important to keep in mind that these costs can vary depending on the location and condition of the property, as well as the current market conditions. It’s recommended to consult with a real estate agent or property manager to get a better understanding of the holding costs for a specific property. Working closely with a WizWealth mortgage broker can help you decide on the most suitable lending amount for you to plan your cashflow before you decide on the purchase.