When they take out a mortgage, many people forget to consider the associated fees and expenses. Here are some of the extra costs that you'll need to consider when you take out a home loan.
Most lenders charge a home loan application fee. This can range from loan to loan, and covers:
Lenders generally charge a mortgage establishment fee - a fee for setting up a mortgage.
A third party often chosen by the lender, needs to determine the value of your land and improvements.
Your Mortgage deed needs to be registered with the government.
The government charges stamp duty to register your mortgage.
If you don't have 20% of the purchase price of the property, the lender will require you take out lenders mortgage insurance to cover the risk that you might default on your repayments.
It's wise to have your property inspected for any structural problems or pests (e.g. termites).
Governments charge stamp duty to transfer the ownership of a property.
The new owner of the property needs to be registered at the Land Titles Office.
You generally need to pay a solicitor to handle the transfer of ownership of the property on your behalf.
Most homeowners insure their home and contents against a range of threats: burglary, fire, storm, etc. You need to insure the home while you have a mortgage.
Borrowers should consider protecting the primary income earner while they have a mortgage.
Connecting electricity, gas and telephone can be costly and generally involves the lodgement of security deposits.
Your local council charges rates to cover garbage collection and a host of other services.
If you buy an apartment, body corporate fees are charged, and some fees can be significant - particularly if the building is in need of a major work (e.g. concrete cancer, security upgrade, new hot water system, etc)
Don't forget to make provision for regular maintenance on your home - even if you decide not to undertake significant renovation.
To learn more about the hidden costs of buying a home, talk to an MFAA member today.