May 07, 2014
North Perth Mortgage Choice broker Peter Hale reveals some of the hidden costs involved in purchasing your new home.
Knowing the extra costs involved in buying a new home can make all the difference.
There are more hidden costs than you might realise.
Being informed will help you be prepared for these costs, otherwise you might find out that you have no money left to pay the bills after you move into your new house.
Pest and building inspections
It’s a risky strategy to buy a home without conducting a pest and building inspection, and you want to make sure that your new home isn’t going to fall down around you once you move in. A pest and building inspection can cost anywhere between $500 and $1000 and is highly recommended.
This is one cast you need to be aware of.
Stamp duty is the state government tax applied to all property purchases, although first home buyers may be eligible for concessions. The amount you will pay varies from state to state and you can use an online stamp duty calculator to get an idea of the costs in your state.
If you want more information on stamp duty you can read one of our previous blog’s, “Stamp duty explained”.
Our North Perth mortgage customers know that this is one cost you can’t avoid.
You need a lawyer, settlement agent or conveyancer to legally transfer ownership of the property you are buying or selling.
They will usually conduct title searches as well as arrange strata inspections, and can help you negotiate all the legal aspects of purchasing a new home.
Once again legal fees vary depending on your state and the price of the property, but can generally cost around $1,000 - $1,500, with our North Perth mortgage customers able to make use of our relationship with our preferred partners.
This is where some of the real hidden costs lay.
Once you apply for a home loan, the fees start to kick in, and unless your broker has done their homework you might start to find the upfront fees aren’t so upfront.
Most loans carry a one-off application fee – also called loan approval fee – which can range up to $600.
However with the current market competition it is normal to find a loan with a low, or no application fee.
After application fees this is where our work as your broker really starts to pay off.
The other fees we uncover for our North Perth customers can include:
Settlement fees of up to $300
Monthly loan account fees of up to $10 per month ($120 pa)
Monthly offset account fees of $9 per month ($108 pa)
All these fees will make a difference in the long run, and in some cases mean that any interest rate savings you are receiving may disappear before your eyes.
This is where knowing your sums will really make you prepared.
Mortgage insurance – or lenders mortgage insurance (LMI) – covers the lender for the amount you borrow in the event that you default on your loan.
The lender will charge you this one-off fee typically if you have less than 20 percent deposit. The higher the percentage you borrow, the more you will have to pay in mortgage insurance, which can run into the thousands of dollars, depending on the value of the loan.
This is where your budget will get a whack with the reality stick.
Even after considering all the fees listed above you still need to include into your budget enough to cover the connection of and at least two months for:
A professional broker will make sure you know all the costs
Not considering all the fees could leave you high and dry when it comes to move into your new house.
If you’re looking for a new house or even just want to know what fees to budget for and make sure you have it covered, feel free to call Peter Hale at Mortgage Choice in North Perth on 0402 252 150 or email your questions to email@example.com