Costs
Buying a House and Getting a Home Loan
Along
with the costs of
checking out the property you are buying and physically moving from the
one you
are now in, there are a number of government fees, taxes, legal fees
and lender
fees incurred when you go for a home loan and buy a new home. Remember
that
most of these are paid before or around the time your property settles,
so your
savings or loan will need to cover these amounts as well.
Typically,
you would
plan for these fees when you are purchasing:
Lender
Fees
Many
lenders will
negotiate on fees dependent upon your situation. Some may waive some or
all of
the fees which relate to your loan. However as a rule of thumb, the
complete
absence of up-front fees generally means a higher interest rate or
ongoing
fees.
Ø
Loan
Application Fees.
Ø
Loan
Establishment Fees
Ø
Valuation
Fees Legal Fees (relating to the
Mortgage)
Ø
Account
Transaction Fees
Ø
Exit
Fees and or Deferred Establishment
Fees
It
is difficult to give
a guide to the amount for each fee, as they differ so much among
lenders. By
way of example, the application fee amount may be nothing or as high as
$600,
or more. It is extremely important to be very clear on these costs up
front and
ensure your broker negotiates where possible.
Lender's
Mortgage
Insurance (LMI)
Whenever
you have less
than a 20% deposit, you will almost always have to pay mortgage
insurance or
LMI. This insurance is a one-off payment by the borrower to the lender
(or
lender’s insurer) to “insure” the loan. It insures
the lender for any shortfall
on a loan, so if you were sold up because of defaults, it covers the
difference
between what you are sold for and the amount still owing. Up to
95% loans
(or 5% deposit loans), the amount would typically be up to 1.2-1.5% of
the loan
amount. As you get closer to 80% home loans (or 20% deposit), the cost
usually
lowers substantially. If you have a 20% or more deposit, and all other
factors
are in line, LMI is generally not charged.
There
may be some lenders
who can help you reduce up front costs by adding LMI and other fees
into the
total loan package. While this can look like a very attractive option,
make
sure you check this and understand what it really means in terms of
real cost
over the life of the loan.
Stamp
Duty, Mortgage Registration,
Mortgage Stamp Duty and Registration Fee
These
taxes/fees are
state government- based fees and are applied according to the law of
the state
where the property is (i.e. not the property that you live in, if you
reside in
another state). Each state government calculates these fees differently.
Stamp
duty is payable in
all states, but some groups such as those below are entitled to
different
exemptions or reductions on stamp duty:
Ø
First-home
buyers (All
states)
Ø
Home
buyers with Concession Cards (Victoria)
Ø
Principal
Residence Rebates
(WA/NT).
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