The costs of buying a home

Once you’ve done the hard work of saving for a deposit it’s easy to forget to budget for the other costs. So here’s a quick checklist of things to plan for when organising your finances.

 When you make your plans to purchase a home loan, your budget will need to include the extra costs involved with getting it set up with the lender. These costs will vary from loan to loan and lender to lender, depending on your personal financial situation and the type of loan you take out. As your mortgage experts, we will advise you on these costs and help you to plan your budget. Generally speaking, these extra costs may include:

Home loan application fees: most lenders charge a home loan application fee to cover the costs of legal contracts, property title checks and credit checks.

Mortgage establishment fees: in addition to the application fees, most lenders also usually charge an extra fee to cover the operational costs of setting up the mortgage.

Property valuation: before the mortgage is approved, your lender will need to complete an independent valuation of your property – both the land, buildings and improvements.The lender will not accept your valuation – even if you have paid an independent valuations expert to produce it for you.

Mortgage registration fees: all mortgages must be registered with the government and a registration fee will apply. We can help you calculate the cost for your particular property.

Lenders Mortgage Insurance: if you borrow more than 80% of the purchase price of your property, you will be required by law to take out Lenders Mortgage Insurance. This insurance does not cover you in the event you cannot make your repayments. It covers the lender in case you default on your loan. In some cases this cost can be added to the loan.

Costs involved with purchasing a property

Other costs you will need to budget for:

Building inspection fees: It makes sense to do proper research on your property by obtaining a building and pest inspection report. These will allow you to assess the condition of the property and help you determine the potential costs of maintaining it. These reports are very important to your purchasing decision, so arrange for them to be carried out early.

Government fees: Government fees such as Stamp Duty and Registration of Title/Land Transfer Fee will most likely be payable. Depending on the property location, your personal eligibility for any concessions, the amount you may have to pay will vary. Call us and we will help you calculate these costs.

Legal fees: every property purchase involves a legal transfer of ownership from the seller to you the purchaser and for this process you will need to engage the services of a Solicitor or Conveyancer. We can help you find a conveyance and give you an estimate of the cost.

Home & Contents Insurance: your new home will be your most valuable asset and it’s important that you organise the appropriate insurance cover to protect against disasters like fires, floods and theft. The building insurance section of your cover needs to be taken out when you put down your deposit to ensure you have insurance cover while the transaction is processed.

Mortgage/Income Protection Insurance: It is also importantthat you consider an insurance product that will provide protection for your mortgage repayments should you ever be unable to work due to sickness, injury or some other unforeseeable event that results in the loss of your income. We can help you plan for your insurance needs and obtain cost-effective cover that’s right for you.

The costs of moving in

When the big day arrives and it’s time to move in and start enjoying your new home, things will run much more smoothly if you plan ahead for the associated costs. Of course, these will vary widely from person to person and home to home, so planning will very much depend on the property you buy. Here’s some things you’ll need to budget for:

Utility costs: setting up your gas, water and electricity supply may require you to pay a deposit. Plan ahead and talk to your suppliers about the costs and getting things operational on the day you move in. Remember, you can talk to several different suppliers to get a more competitive rate.

Body corporate fees:  if you are buying an apartment or a strata title property, it is likely that you will have to pay monthly body corporate fees. We recommend that you check out these fees when you are planning to buy your property as they can be quite significant, particularly if the property is in need of a lot of maintenance or repair. The first month’s fees will be due as soon as you have settled on the property.

Council rates: these rates cover the costs of your garbage collection and other services provided by your local council. The cost involved will vary depending on the value of your property so you should check with the council to determine these costs and budget accordingly.

Ongoing maintenance: all homes require ongoing maintenance and you should remember to budget for any eventuality. When you rent, your landlord pays for anything that goes wrong, so if the hot water stops working they replace it. If something goes wrong in your own home, you have to fix it yourself so it’s wise to set aside a little money for emergencies.

Moving costs: depending on where you live it could be quite expensive to organise a mover to get your things to your new home. We recommend that you get quotes from three reputable carriers and be sure to ask them to include insurance costs in their quotes.

Getting your home set up: this is the fun part! Remember that when you move in, you’ll need furniture and a full pantry. Make an allowance in your budget for the things you’ll need to get set up in your new home and really enjoy the fact that it is now yours!

As mortgage experts, remember that we help you with budgeting, planning and organising the finances for your new home. We want to help you with every aspect of buying your new home, from confirming the costs and helping you work out your budget, to planning your insurance needs and we’ll even give you referrals to other reliable professionals you may need to consult. But of course, our job is to shop around to find you exactly the right loan for your personal financial situation and goals, so please give us a call today.

About Paul Brazier