It is never easy for the first time especially purchasing a home which could be the biggest transaction in your life. Below are few tips we think might help to prepare you for it.
Check out our snapshot of the usual costs involved in purchasing a home:
1. Costs that are ongoing
- Charges in interest – it can be possible for you to choose a variable or fixed rate generally or get a combination of both. It would be worth it to do some research on this especially since interest rates may increase or decrease.
- Repayments of Loan – oftentimes, what you are capable of paying back and how often you are able to make repayments could have a significant impact on the time that it will take for you to have your home loan paid off.
- Other expenses that are ongoing – owning a home has ongoing costs which includes home improvements, contents and building insurance, utility costs, council rates, and communal properties’ strata fees.
2. Costs that are upfront
- Application fee for the loan – this is what you pay to your lender once the loan starts. The fees may vary as it could depend on the provider and have things such as basic admin, credit checks, and property appraisals covered.
- Price of purchase – this is the property’s actual cost. You may generally have to get a loan unless you can provide outright payment for it. Take note that lenders would generally require a 10% to 20% minimum deposit.
- Fees from the Government – Every territory and state government of Australia would have to apply stamp duty which is a property or land transfer tax. This may vary as it could depend on the location of your future residence. Transfer fees and mortgage registration applies and this can be different from one state to another.
- Mortgage insurance of the lender – If your deposit is less than 20%, you may need to provide payment for the mortgage insurance of the lender as this exists to provide protection to your lender in case you are having problems in repaying your loan.
- Conveyancing and legal fees – These are what covers the solicitor or conveyancer’s services in real estate as that person will become responsible for conducting the process in settlement and preparing the paperwork that is necessary.
- Inspections on the building, strata, and pest – providing payment for these services will assist you in ensuring that issues and concerns regarding the finances, structure, and maintenance are sorted. This can save you from any possible detrimental problem that may happen in the future.
- Costs in moving – This may come down to how many of these you are capable of doing on your own. You may hire professionals, have a truck rented, or simply ask for assistance from your friends and family.
3. Allow yourself to be familiar with the various kinds of loans
There is a wide variety in fees in interest rates that could depend if you’re after the basic package or working on getting the added features. In order to attain an improved idea of the costs, whenever you see and advertisement of the home loan, you may notice a couple of rates displayed. These are the comparison rate and interest rate.
The comparison rate of the home loan includes the annual rate of interest including a lot of the ongoing and upfront fees. Some of the home loans that have lower interest rates may be full of fees. Because of this, even if they may appear affordable, they usually end up as something that is more expensive. Our rate in comparison can assist you in identifying this so you can be more accurate in comparing loans.
Make sure that you check out the different features of your considered loans including its possible disadvantages and advantages. One example is that there are loans that may allow you to utilize an account that is offset, have funds redrawn, or make additional repayments. These can minimize the interest that you may need to eventually pay.
Whenever you are searching for the most recommended deal, always remember to check out the market first and inquire if the lender is capable of providing a rate that is better than what they are advertising.
Ozbroker Plus is a mortgage broker platform that began in 2017 by several passionate mortgage-brokers with strong IT backgrounds. We believe that digital banking and other online services are capable of reshaping the process in mortgage application. Because of this, we strive to make the online loan application easier to understand and the progress as smooth as possible. Contact us for more information