Buying a home is a big deal and likely to be the biggest purchase you will ever make.
Getting approval to buy something for that much money is pretty daunting but the mortgage cost isn’t the only expense you need to consider. If you’ve been through the process before you’ll be well versed on those extra costs, but if this is your first time, a good rule of thumb is to allow 5% extra for costs.
Save yourself heartache and bank balance pain by arranging a building inspection on your future home before cooling off finishes. This way, if you learn about an expensive defect with the home you can step out of the deal without getting stung. Prices can vary depending on your builder but a good budget would be anywhere from a few hundred to $1000.
A conveyancer is a specialist who represents you during the transfer of home ownership from the seller to you. A good conveyancer will make that transition as smooth as possible and if this is your first home it’s worth paying a bit extra to ensure you have a conveyancer who can help you through this process. Expect to pay anywhere from $500 to a few thousand.
There are a few fees which you will encounter that can be slightly different depending on which state you’re buying in. These include things such as Stamp Duty and a Property transfer fee. Transfer fees vary from state to state but are generally around the $100 mark; however, Stamp Duty will add thousands to your home bill which is why it’s so important to learn what the fees are before you buy. To calculate how much Stamp Duty you may have to pay, you can use our calculator here.
Loan application fee
The loan application fee, often referred to as an ‘Establishment Fee’ or ‘Up Front Fee’, is the fee a lender might charge to cover their internal costs of processing your loan application. While all financial institutions and loans will vary there may be an option to take up a loan package which will waive your establishment fee. You can take a look at our Home Loan Package here.
Lender’s Mortgage Insurance
Before you make an offer on a property, you need to have enough money saved up for a deposit. The deposit amount required depends on the property price in the chosen neighbourhood but ideally, if you can cover 20% of the purchase price you will avoid having to pay Lender's Mortgage Insurance (LMI). LMI is an insurance that protects the lender in the event of default by the borrower. LMI is a one-off payment that usually occurs when more than 80% of the property value is borrowed by a home buyer. You can pay the cost for LMI upfront at settlement or it can be included into your home loan. Your Home Loan Adviser will be able to calculate the costs for you once you’ve found your home.
Rates – council, utility
Another one that your conveyancer will work out for you (helpful people they are!) is council and utility rates. As bills are generally paid quarterly you will need to reimburse the property vendor for the amount they have up to settlement. However, this is handy because it means when you move in you won’t be slogged with a barrage of council rates and levies and instead can get on your feet before you tackle these expenses.
Home and Contents Insurance
It’s so important to have Home and Contents Insurance on your new property as soon as you move in. While it’s not mandatory, it’s a good idea to have this in place before you move in so as to cover you for any issues which could arise and may hinder settlement. Insurance will vary depending on the property and insurance but you can get an online quote here.
The information above is general advice only and does not take into consideration your personal objectives, financial situation or needs (“your personal circumstances”). Please consider the relevant Disclosure Documents and your personal circumstances before making any decision to purchase the products. Contact us on 13 11 82 with any questions, or visit your nearest branch to talk to a consultant.
Ready to move in? Our Home Loan Rates could help you get into your first home sooner.