Buying a property is a tall enough task without unexpected costs catching you by surprise. These nasty revelations could affect your ability to make mortgage repayments, or at the very least cause stress and financial difficulty.
At Advantage Finance we're all about making buying your first home easy and stress free, so we'll be with you from start to end, making sure you know what's happening every step of the way. To that end, read on to discover two of the most common unexpected costs when buying a home, and how much they are likely to set you back.
Lenders mortgage insurance
If your deposit is less than 20 per cent of the home's value you may have to pay lenders mortgage insurance, or LMI. This is a fee charged by your lender that insures them in the unlikely event that you can't make your mortgage repayments and default on your home loan.
As an example if you buy a property at $500,000 and borrow $450,000 lender's mortgage should cost you just under $7000, according to the Your Investment Property calculator.
If you still feel unsure about whether or not you need lender's mortgage insurance, a South Australian mortgage broker can clarify things for you.
Mortgage Fees
Your mortgage will come with a host of one-off or ongoing fees that must be factored into your budget. The might include establishment costs, administration fees, late payment penalties and early exit fees. You may also be charged discharge fees when you pay your mortgage off in full, or refinancing fees if you switch loans.
The amount a bank can charge you is luckily limited to 48 per cent of the principal by law, however this can obviously still be a hefty sum. If you're aware of these fees and stay on top of them, they shouldn't present an issue
The more your property costs the more your stamp duty will be.
Stamp duty
Stamp duty is a hefty fee that often challenges the bank accounts (not to mention the patience) of first home home buyers. It is a tax that is levied by the government on the transfer of property and differs according to what state your home is in, your home's purchase price and the intended purpose of your loan.
As a general rule, the more your property costs, the more your stamp duty will be.
If you need any additional help with any aspect of the home loan or the buying process, feel free to get in touch with the friendly team at Advantage Finance. We can make sure you know exactly what's coming at every turn.
