When you’re planning on buying property, it’s important to understand that the purchase price is not the only number you need to worry about. If you’ve saved $80,000, you can’t just start looking for a $400,000 property, safe in the knowledge you’ve got the 20% deposit sorted.
At Mortgage Broker Group, we can take you through the other costs involved in property purchase, as well as finding possible ways to reduce these up-front costs.
Read on for an idea of some of the additional costs you need to factor in when buying a house, unit or apartment.
The loan
Once you find a suitable lender, they will often charge an application fee. Some of the more basic loans might not have these fees, but it’s a fairly standard charge. While it’s typically only around $500 – $800, you’ll still need the funds. This fee is to cover the costs the bank or other lender incurs for running credit and title checks, attending the settlement meeting with your conveyancer and the vendor’s lender and – finally – writing your loan contract.
Next up is the establishment fee. It’s a bit cheeky, but many lenders slug you for the privilege of doing business with them! While it’s usually a small charge, designed to cover the costs of setting up your loan and any linked accounts, our brokers have been known to talk lenders into waiving it in certain circumstances.
Another charge that takes people by surprise is Lenders Mortgage Insurance (LMI). Depending on your circumstances, we may be able to negotiate a deposit lower than the standard 20%. It’s not uncommon to talk lenders into accepting 10% of the property price. BUT the banks will always protect themselves, and might charge you the cost for them to take out insurance in case you default on repayments.
Less common is a valuation fee, which your lender might charge to cover the cost of having your desired property valued. Smaller lenders may include this charge, or it might apply if your property is in a remote location.
The property
Prior to purchase (or as a caveat on a private sale) you might choose to get a builder to carry out a property inspection. The outlay of a few hundred dollars seems steep (especially if you are interested in multiple properties), but it’s something we recommend. It’s much cheaper than unexpected costs to re-roof, re-wire, re-plaster or re-stump after you move in.
And as well as the dreaded Stamp Duty (anywhere from $25,000 to $43,000 for an $800,000 property, depending where you live), you’ll also need money to cover your conveyancer or solicitor for settlement duties, and council and water rates.
The moving
Finally, there are costs typically associated with any move. Setting up a new home can be pricey.
Make sure you’ve allocated funds to cover:
- Body corporate fees (if applicable)
- Home and contents insurance
- New furniture and furnishings
- Cosmetic changes
- Unexpected repairs.
Talk to us
It might all seem daunting when you consider all of these possible costs, but Mortgage Broker Group’s expert loan brokers are skilled in finding ways to reduce or avoid some of these costs.
Contact Mortgage Broker Group today for a no-obligation chat about how we can make the most of your available funds and get you into a property sooner.