Buying a home is a very exciting time – particularly if you’re climbing on to the property ladder for the first time! When you finally get your deposit together, it’s really easy to get caught up in the moment and forget to budget for the other costs associated with buying your home, so here’s a quick checklist of things to include when planning your finances for your big move.
THE COST OF TAKING OUT YOUR HOME LOAN
When you take out a home loan, you’ll need to budget for 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 costs of setting up the mortgage in their banking systems.
Before they can grant you a mortgage, your lender will need to get an independent valuation of your property – both the land and the buildings and improvements. It is important to note that 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. Ask us to help you calculate how much this will cost for your particular property.
LENDERS MORTGAGE INSURANCE
If your deposit amounts to less than 20% of the purchase price of your property, you will be required to take out Lenders Mortgage Insurance by law. It is important to note that this insurance is for the lender in case you default on your loan – it does not cover you in the event you cannot make your repayments.
COSTS INVOLVED WITH PURCHASING A PROPERTY
Purchasing a property can be quite a complicated process and it is easy to forget to budget for the costs of covering all the details involved. If you’ve located the property of your dreams, here’s what you need to cover off to make it yours:
BUILDING INSPECTION FEES
If you decide a particular property might be the right one for you, it pays to do proper research on it by obtaining a building inspection report and a pest inspection report. These will give you an accurate picture of the condition of the property and help you assess the likely costs of maintaining it moving forward. These reports are very important to your purchasing decision, so get them organized early on in the buying process.
Before a property can become yours, you’ll have some government fees to pay like Stamp Duty and Registration of Title/Land Transfer Fee. Depending on where you live, and your personal eligibility for any concessions, the amount you may have to pay will vary. Talk to us and we will help you work out your costs in this area.
Each property purchase requires the legal transfer of ownership of the property to you and for this you will need to employ the services of a Solicitor or Conveyancer. If you don’t have one lined up, let us know and we will give you a referral to a reputable legal adviser.
HOME AND CONTENTS INSURANCE
Your new home will be your most valuable asset and it’s very important that you organise the appropriate insurance cover to protect you 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 make sure you are covered while the transaction is going through.
MORTGAGE/INCOME PROTECTION INSURANCE
We recommend that you also budget for an insurance product that will cover your mortgage repayments in the event you are unable to work due to sickness, injury or some other unforeseeable event that causes you to lose 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:
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.
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.
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.
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!
Remember, as your mortgage experts, we’re here to help you with organizing the finances for your new home. We’re happy 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. And of course, it is our job to shop around to find you exactly the right loan for your personal financial situation and goals, so please give us a call today.
MORTGAGE FOCUS | AUGUST 2015
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069