Purchasing a new home is an exciting milestone, but it’s essential to consider the additional expenses that come with it. While many individuals focus on the property’s purchase price, they often overlook the various fees and costs associated with obtaining a mortgage. At Clark Finance Group, we understand the significance of these additional expenses and aim to shed light on them. In this blog post, we’ll explore the often-forgotten costs of buying a home, providing valuable insights to help you make informed financial decisions.
Home Loan Application Fees
When applying for a home loan, it’s common for lenders to charge an application fee. This fee varies depending on the type of loan and the lender you choose. The home loan application fee typically covers essential services such as loan contracts, property title checks, credit checks, and attending a settlement.
Mortgage Fees and Costs
In addition to the application fee, there are other fees and costs associated with your mortgage:
- Mortgage Establishment Fees: Lenders typically charge a fee to set up your mortgage, known as the mortgage establishment fee. This fee covers the administrative tasks involved in initiating your mortgage.
- Property Valuation Fee: To determine the value of your land and improvements, lenders appoint a third party to conduct a property valuation. This fee ensures an accurate assessment of your property’s worth.
- Mortgage Registration: Registering your mortgage deed with the government is a necessary step. Some State Governments may charge stamp duty to register your mortgage.
- Lenders Mortgage Insurance: If you don’t have a deposit of at least 20% of the purchase price or property value, your lender may require you to pay for lenders mortgage insurance. This policy protects the lender in case you default on your repayments.
Property Fees and Costs
When purchasing a property, several fees and costs are associated with the process:
- Building, Pest, and Electrical Inspection Fees: It’s advisable to conduct thorough inspections to identify any structural, electrical, or pest-related issues. These inspections help ensure you are making an informed decision about the property’s condition.
- Registration of Transfer Fee: To register the new owner of the property at the land titles office, a registration of transfer fee is required.
- Legal Fees: Engaging a solicitor or settlement agent is essential for the transfer of property ownership. These professionals handle the legal aspects of the transaction on your behalf.
- Home and Contents Insurance: Lenders typically insist that your property is insured against risks such as burglary, fire, and storm damage. This insurance protects both you and the lender while you have a mortgage.
- Life and Income Protection Insurance: It’s prudent to consider protecting your income and yourself while carrying a mortgage. Life and income protection insurance provide financial security in unforeseen circumstances.
- Utility Costs: Connecting utilities such as electricity, gas, and telephone services may incur additional fees.
- Council Rates: Local councils charge rates to cover services like garbage collection and other community amenities.
- Water Rates: The water corporation charges rates for the supply and maintenance of water to your property.
- Strata/Body Corporate Fees: If you’re purchasing an apartment or a strata-titled property, you may be subject to body corporate fees. These fees cover maintenance and management costs for communal facilities such as lifts and pools.
- Maintenance Costs: Even if you decide against major renovations, it’s important to allocate funds for regular home maintenance. Over time, small maintenance tasks can accumulate, and having a budget in place will help you manage unforeseen expenses.
Purchasing a home involves more than just the purchase price. By considering the additional costs associated with buying a property, you can make well-informed financial decisions and avoid unexpected financial strain. At Clark Finance Group, we are dedicated to guiding you through the mortgage process, including understanding the often-overlooked fees and expenses. By taking these factors into account, you’ll be better equipped to navigate the path to homeownership with confidence and financial security.
For expert mortgage advice and assistance, contact Clark Finance Group today. We’re here to support you every step of the way.