What are the extra costs of buying a home?
When taking out a mortgage, many people forget to consider the associated fees and expenses. Here are some of the extra costs that you’ll need to consider when you take out 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 deed needs 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
Pest and building inspection fees - It’s wise to have your 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 needs to 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 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 are charged, and some fees can be significant – 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.
Maintenance costs– Don’t forget to make a provision for regular maintenance on your home – even if you decide not to undertake significant renovations.
To learn more about the hidden costs of buying a home, talk to your trusted Mortgage Broker today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.