The extra costs of buying a home.
When taking out a mortgage, it’s important to be aware of the extra fees and expenses on top of the purchase price of the property. These are fees that many people don’t consider, and understandably, can be a nasty surprise.
Here are some of the extra costs when you take out a home loan.
Home Loan Application Fees
Most lenders charge a home loan application fee. The fees depend on the loan you’re applying for and the lender but they may cover:
loan contracts
property title checks
credit checks
attending a settlement
Mortgage Fees and Costs
Mortgage establishment fees – a fee for setting up a mortgage.
Property valuation fee – a fee for a third party (chosen by the lender) to determine the value of your land and improvements.
Mortgage registration – your mortgage deed needs to be registered with the government. Some State Governments charge 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 need you to pay for a lenders mortgage insurance policy. This covers their risk if you default on your repayments.
Property Fees and Costs
Building, pest and electrical inspection fees – it’s important to have your property inspected for pests, or any structural or electrical problems
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 or settlement agent to handle the transfer of ownership of the property on your behalf.
Home and contents insurance – most homeowners insure their home and contents against a range of threats, like 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 – just in case.
Utility costs – connecting electricity, gas and telephone usually attract a fee.
Council rates – these rates cover garbage collection and a bunch of other services.
Water rates – rates for the supply and upkeep of water to your property.
Strata / body corporate fees – if you buy an apartment or strata titled property, body corporate fees are charged, and some of these fees can be significant. These rates can be high if the building is in need of major work, or if there are lifts, pools and other communal facilities.
Maintenance costs – don’t forget to make provision for regular maintenance on your home, even if you decide not to undertake significant renovation.
It can be a bit much. We get it. We’re happy to walk you through the above whenever you’re ready. Just give us a call, or drop us a message.