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Finance, Home Loan & Mortgage Broker Business - The costs involved in buying a home >>
Along with the costs of checking out the property you are buying and physically moving from the one you are now in, there are a number of government fees, taxes, legal fees and lender fees incurred when you go for a home loan and buy a new home.
Many lenders will negotiate on fees dependent upon your situation. Some may waive some or all of the fees which relate to your loan. However as a rule of thumb, the complete absence of up-front fees generally means a higher interest rate or ongoing fees.
Whenever you have less than a 20% deposit, you will almost always have to pay mortgage insurance or LMI. This insurance is a one-off payment by the borrower to the lender (or lender's insurer) to "insure" the loan. It insures the lender for any shortfall on a loan, so if you were sold up because of defaults, it covers the difference between what you are sold for and the amount still owing. On 100% loans, dependent on the lender and the risk, mortgage insurance can cost up to 3% of the amount you are borrowing. Up to 95% loans (or 5% deposit loans), the amount would typically be up to 1.2-1.5% of the loan amount. As you get closer to 80% home loans (or 20% deposit), the cost usually lowers substantially. If you have a 20% or more deposit, and all other factors are in line, LMI is generally not charged.
With the increasingly competitive lending market, there are a number of lenders who can help you reduce up front costs by adding LMI and other fees into the total loan package. While this can look like a very attractive option, make sure you check this with your mortgage broker and understand what it really means in terms of real cost.
These taxes/fees are state government- based fees and are applied according to the law of the state where the property is (i.e. not the property that you live in, if you reside in another state). Each state government calculates these fees differently.
When purchasing property, you would usually employ a solicitor or conveyancer to look after the property exchange paperwork. Dependent upon the value of the property and the state you live in, this can cost as little as $200 plus disbursements up to over $1000, depending on complexity. Get quotes.
Building inspections are highly recommended and are sometimes a condition of loan approval. It is always a good idea to have one done irrespective of the lender's loan approval conditions.
A pest and termite inspection typically costs between $200 and $400, and is also highly advisable, if not legally required.
Don't forget to factor in the cost of mail redirection, furniture removal, connecting the power, gas and phone.
Note: In all cases except statutory costs, approximate prices are based on the median selling price of homes in Australian capital cities. While the information here should be seen as a useful guide, it is indicative only and should be qualified with the appropriate providers.
The home loan market is very competitive. There are literally thousands of home loan options to choose from and the fastest way to get to the best decision for you is to get assistance. Make an appointment or talk to a local mortgage broker before making a final decision. If you have any questions about your loans or how brokers work, please call at any time on 13 XINC (13 9462) or contact us via email and we will return your call within 2 business hours.
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