A first-time buyers’ guide to budgeting
When it comes to budgeting to buy a home, the process can feel daunting – especially if you are a first-time buyer.
A good place to start is by getting your head around the various costs associated with buying a property and applying for your first home loan.
While these can vary from state to state, getting a rough estimate together will help you determine how much you will need to borrow – and what kind of a deposit you will require to do so.
Lenders’ fees and stamp duty
A mortgage lender may charge you a fee to value your property and process your loan application. Together, these fees may reach into the region of $1,000, so it is important to be prepared.
You should also be ready for stamp duty, which is calculated on your property as well as the size of your mortgage. Property stamp duty and mortgage stamp duty can vary from state to state – and in many states, there are concessions for first-time buyers who meet specific criteria – so it is important to do your research and ask plenty of questions.
Lenders’ mortgage insurance is a one-off fee that is designed to offer your lender protection in the event that you are unable to repay your loan.
This type of financial product is generally a requirement anytime you borrow against more than 80 per cent of the value of your property. The amount you will need to pay is calculated on a sliding scale and will depend on a number of factors, including your loan-to-value ratio.
Taxes and fees
In addition to the value of your property, the amount of money you have already saved towards a deposit and the fees listed above, there are a number of other important charges you will want to bear in mind.
These include the fees for services carried out by solicitors and conveyancers and will depend on a number of factors, including the amount of work that was done and the amount of time it took.
You will also need to budget for the costs of inspection reports as they are required, as well as any fees associated with enlisting a removalist service on moving day.