What costs are involved with buying a home?

buying your first property! When you finally get your deposit together, it’s really easy to get caught up in the moment and forget to budget for the other costs associated with buying your home, so here’s a quick checklist of things to include when planning your finances for your big move.

The cost of taking out your home loan:

When you take out a home loan, you’ll need to budget for the extra costs involved with getting it set up with the lender. These costs will vary from loan to loan and lender to lender, depending on your personal financial situation and the type of loan you take out. As your mortgage experts, we will advise you on these costs and help you to plan your budget. Generally speaking, these extra costs may include:

Home loan application fees: many lenders charge a home loan application fee to cover the costs of legal contracts, valuation, property title checks and credit checks.

Mortgage establishment fees: in addition to the application fees, some lenders also usually charge an extra fee to cover the costs of setting up the mortgage in their banking systems.

Property valuation: before they can grant you a mortgage, your lender will need to get an independent valuation of your property – both the land and the buildings and improvements. It is important to note that the lender will not accept your valuation – even if you have paid an independent valuations expert to produce it for you.

Mortgage registration fees: all mortgages must be registered with the government and a registration fee will apply. Ask us to help you calculate how much this will cost for your particular property. This is a State Revenue Office Charge

Lenders Mortgage Insurance: if your deposit amounts to less than 20% of the purchase price of your property plus costs, you will be required to take out Lenders Mortgage Insurance (LMI) by law. It is important to note that this insurance is for the lender in case you default on your loan – it does not cover you in the event you cannot make your repayments.

Government fees: before a property can become yours, you’ll have some government fees to pay like Stamp Duty and Registration of Title/Land Transfer Fee. Depending on where you live, and your personal eligibility for any concessions, the amount you may have to pay will vary. Talk to us and we will help you work out your costs in this area. These are State Revenue Office Charges

Building inspection fees: if you decide a particular property might be the right one for you, it pays to do proper research on it by obtaining a building inspection report and a pest inspection report. These will give you an accurate picture of the condition of the property and help you assess the likely costs of maintaining it moving forward. These reports are very important to your purchasing decision, so get them organized early on in the buying process.

Legal fees: each property purchase requires the legal transfer of ownership of the property to you and for this you will need to employ the services of a Solicitor or Conveyancer. If you don’t have one lined up, let us know and we will give you a referral to a reputable legal adviser.

Disbursements: you will need to pay back to the Vendor any expenses they have paid for the remainder of the year like Council Rates, Body Corporate etc.

Home & Contents Insurance: your new home will be your most valuable asset and it’s very important that you organise the appropriate insurance cover to protect you against disasters like fires, floods and theft. The building insurance section of your cover needs to be taken out when you put down your deposit to make sure you are covered while the transaction is going through.

Mortgage/Income Protection Insurance: Consider buying an insurance product (Mortgage Protection Insurance) that will cover your mortgage repayments in the event you are unable to work due to sickness, injury or some other unforeseeable event that causes you to lose your income. We can help you plan for your insurance needs and obtain cost-effective cover that’s right for you.

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