October 16, 2014
We all know that buying property in Australia isn't cheap, however unsuspecting clients are often surprised when the full costs of purchasing a property are revealed.
These costs can broadly be placed into four categories; Government costs, loan application costs, purchase costs and if you are building a new property, construction costs.
In part one of this two part blog, we're going to cover government and loan application costs.
Purchase stamp duty
Property transfer stamp duty is a state government tax payable by the buyer and is calculated on the purchase price of the property. This tax is usually the largest single cost when purchasing a property and is payable whether or not the purchase is financed with a mortgage. In Victoria, first home buyers may be eligible for a 50 per cent reduction in purchase stamp duty.
Property transfer fee
Another state governemnt charge to register the transfer of ownership from one to another.
Mortgage Registration fee
If a mortgage is used to purchase the property, the Land Titles Office charges a fee to register the mortgage on the title. In Victoria this fee is currently $111.00.
Loan Application costs
Lenders Mortgage Insurance (LMI)
When borrowing more than 80% of a property's value, lenders require borrowers to take out LMI to protect the lender if the borrower were to default on the loan. The LMI premium is a one off charge which can be paid for at the time that the loan is funded or added to the loan amount and is
Loan application fee
When applying for a loan, some lenders may require the borrower to pay an loan application fee. The amount of this fee varies depending on the loan type, lender, security and loan structure. The fee covers application, legal, valuation and settlement costs incurred by the lender. Many lenders have promotions where they may discount or waive.
Mortgage Choice has a number of online calculators to help you calculate some of these government and loan application costs.
If you would like further information on the costs associated with purchasing a property, please call us on 03 9432 6070 or click on the 'contact us' tab at the top of this page.
Part 2 of this blog will cover the purchase and construction costs.