When taking out a mortgage, don’t forget the extra costs of buying a home – consider the associated fees and expenses that you will incur. Here are some of the extra costs that you’ll need to consider when you get a home loan:
Home Loan Application Fees
Most lenders charge a home loan application fee. This can range from loan to loan, and covers:
- Loan contracts
- Property title checks
- Credit checks
- Attending a settlement
Mortgage Fees and Costs
- Mortgage establishment fees – Lenders generally charge a mortgage establishment fee – a fee for setting up a mortgage.
- Property valuation – A third party – chosen by the lender – is appointed to determine the value of your land and improvements.
- Mortgage registration – Your mortgage deeds need to be registered with the Government.
- Mortgage stamp duty – Some State Governments charges stamp duty to register your mortgage.
- Lenders mortgage insurance – If you don’t have 20% of the purchase price or the value of the property, the lender will require you to pay for a lenders mortgage insurance policy that covers their risk in the event you default on your repayments.
Property Fees and Costs
- Building, Pest and Electrical Inspection fees – It’s wise to have your new property inspected for any structural or electrical problems and for pests (e.g. termites).
- Stamp Duty – Governments charge Stamp Duty to transfer the ownership of a property.
- Registration of Transfer Fee – The new owner of the property must be registered at the Land Titles Office.
- Legal fees – You generally need to pay a Solicitor of Settlement Agent to handle the transfer of ownership of the property on your behalf
- Home & contents insurance – Most homeowners insure their home and contents against a range of threats: burglary, fire, storm, etc. Lenders will insist that your property is insured while you have a mortgage.
- Life and income protection insurance – Borrowers should consider protecting their incomes and themselves while they have a mortgage.
- Utility costs – Connecting electricity, gas and telephone can attract a fee.
- Council Rates – Your local council charges rates to cover garbage collection and a host of other services.
- Water Rates – The water corporation charges rates for the supply and upkeep of water to your property.
- Body corporate fees – If you buy an apartment or Strata Titled property, body corporate fees will be charged. Some buildings can have very high feed – particularly if the building is in need of a major work (e.g. concrete cancer, security upgrade, new hot water system, etc) or if there are lifts, pools and other communal facilities. This should be a key question to ask before agreeing to buy an apartment.
- Maintenance costs – Don’t forget to make provision for regular maintenance on your home – even if you decide not to undertake significant renovation.
There is a lot to consider when you are ready to buy a new home – especially if this is the first time you have bought a home in Australia. Our advice is to talk through these when you are reviewing the options for your home loan – in some cases it may help your loan application if you have a plan to cover the ongoing costs of ownership.
Make sure that you don’t forget these extra costs when buying a new home – talk to us at Madison Wells Pty Ltd t/a Astute St Leonards to help with your planning! We are here to help you through the process.