By Adam Bourke, Mortgage Choice in Paddington, Queensland
When buying your first property, it pays to consider the related costs – aside from your regular home loan repayments.
While the types of costs you can expect to pay may vary, depending on whether you're taking out your first loan, planning to live in your first property or rent it out – there are some that are universal. These include, but are not limited to:
- Legal fees
- Mortgage registration fee
- Discharge of mortgage
- Building and pest inspections
- Lender settlement fees
Your solicitor will provide you with expected legal and transfer fees and your financial institution will update you regarding lending fees, such as any applicable application fees and valuation fees.
Most costs, such as transfer duty (also known as stamp duty) can be accurately assessed upfront. Other fees must be estimated, such as total solicitor's costs as well as council and water rates adjustments.
Why fees matter
It's not uncommon for borrowers to find themselves in an uncomfortable financial situation when their property reaches settlement. Some less experienced borrowers may find they have a shortfall of funds, because they haven't been given the bigger picture regarding a complete list of costs.
Being caught short, in a worst-case scenario, could lead to some home buyers being sued, losing their deposit, or being charged a default rate of interest for not settling on time.
Enjoy peace of mind with a complete list of costs
You may not be fully aware of all the home loan costs applicable to your situation, so it's worth getting the advice from mortgage experts. This is where Mortgage Choice can help.
I generally provide home buyers with a complete list of estimated costs associated with buying a property. This information is tailored to the home buyer's individual situation so that they are well equipped, with financial peace of mind, from the start of the home loan process through to when a property is settled.
Although many of the largest fees are generally payable at settlement (such as transfer duty) or 30 days from the contract date, some are payable during the process. Fees that are commonly paid during the property buying process include building inspection fees and solicitors' searches. Payment of some fees, such as transfer duty (if settlement is longer than 30 days) can be delayed to settlement by paying a rate of interest to the government.
There are many exemptions and concessions for first home buyers, too, which can vary from state to state. A mortgage broker such as myself or your local Mortgage Choice broker can also assist with this.
Knowing you've got the costs right, with no nasty surprises, brings peace of mind during what can be a highly stressful time for many home buyers.
Have you ever been caught short when purchasing a property? Please share your experience with us by posting a comment below. If you're in the market for a home loan, it's worthwhile spending some time with an experienced mortgage broker to work out all your costs. You can contact me or your local Mortgage Choice broker at any time.