When obtaining a mortgage, many individuals fail to consider the various fees and expenses that go beyond the actual price of the property. Below, we outline several additional costs that you should be taken into account when applying for a home loan.
1.Home Loan Application Fees
- Most lenders impose an application fee for home loans. The specific amount will depend on the type of loan you are applying for and the lender you decide to go with. These fees generally cover aspects such as loan contracts, property title checks, credit checks, and the settlement process.
2. Mortgage Fees and Costs
- Mortgage Establishment Fees: Lenders typically charge a fee for setting up a mortgage, known as a mortgage establishment fee.
- Property Valuation Fee: A third-party appointed by the lender will assess the value of your land and any improvements on it.
- Mortgage Registration: To register your mortgage with the government, you may incur stamp duty charges imposed by certain State Governments.
- Lenders Mortgage Insurance: If you do not have at least 20% of the property’s purchase price, the lender may require you to obtain lenders mortgage insurance. This policy protects the lender in the event of loan default.
3. Property Fees and Costs
- Building, Pest, and Electrical Inspection Fees: It is advisable to have your property inspected for structural issues, electrical problems, and pest infestations.
- Registration of Transfer Fee: When transferring property ownership, you must pay a fee to register the new owner at the land titles office.
- Legal Fees: Engaging a solicitor or settlement agent to handle the property’s ownership transfer is typically necessary and involves associated legal fees.
- Home and Contents Insurance: Most homeowners opt to insure their property and belongings against various risks such as theft, fire, and storms. Lenders usually require property insurance while you have a mortgage.
- Life and Income Protection Insurance: Borrowers should consider protecting their income and themselves while carrying a mortgage.
- Utility Costs: Connecting utilities such as electricity, gas, and telephone services come with associated fees.
- Council Rates: Local councils charge rates to cover services like garbage collection and other amenities.
- Water Rates: Water corporations levy rates for water supply and maintenance to your property.
- Strata/Body Corporate Fees: If you purchase an apartment or strata titled property, you will likely be subject to body corporate fees. These fees can be significant, especially if major works are required or if the property includes amenities like lifts and pools.
- Maintenance Costs: It is important to budget for regular maintenance expenses, even if you do not plan on undertaking major renovations.
By taking these additional costs into account, you can have a more accurate understanding of the financial implications associated with buying a home and securing a mortgage.
Give the team at Trusted Financial Choice a call, we are here to assist you every step of the way in your home buying journey.