When taking out a mortgage, people often forget to consider the associated fees and expenses.

Below are some of the extra costs that you will need to consider when you take out a home loan.

Home loan application fees

Most lenders charge a home loan application fee. This can range from loan to loan and covers:

• Loan contracts
• Property title checks
• Credit checks
• Attending a settlement

Mortgage fees and costs

• Mortgage establishment fees – Lenders generally charge a mortgage establishment fee to set up a mortgage.
• Property valuation – A third party chosen by the lender, is appointed to determine the value of your land and improvements.
• Mortgage registration – Your mortgage deed needs to be registered with the government.
• Mortgage stamp duty – Some State Governments charges stamp duty to register your mortgage.
• Lenders mortgage insurance – if you do not have 20% of the purchase price or the value of the property, the lender will require you to pay for a lender’s mortgage insurance policy. This covers their risk in the event you default on your repayments.

Property fees and costs

• Building, pest and electrical inspection fees – It’s wise to have your property inspected for any structural or electrical problems and for pests (e.g. termites).
• Stamp duty – The Government charges Stamp Duty to transfer the ownership of a property.
• Registration of transfer fee – The new oner of the property needs to be registered at the Land Titles Office.
• Legal fees – You generally need to pay a solicitor of Settlement Agent to handle the transfer of ownership of the property on your behalf
• Home & contents insurance – Most homeowners insure their home and contents against a range of threats: burglary, fire, storm, etc. Lenders insist that your property is insured while you have a mortgage.
• Life and income protection insurance – Borrowers should consider protecting their incomes and themselves while they have a mortgage.
• Utility costs – Connecting electricity, gas and telephone can attract a fee.
• Council rates – Your local council charges rates to cover garbage collection and a host of other services.
• Water rates – The water corporation charges rates for the supply and upkeep of water to your property.
• Body corporate fees – If you buy an apartment or Strata Titled property, body corporate fees are charged, and some fees can be significant – particularly if the building is in need of major work (e.g. concrete cancer, security upgrade, new hot water system, etc) or if there are lifts, pools and other communal facilities.
• Maintenance costs – Do not forget to make a provision for regular maintenance on your home, even if you decide not to undertake significant renovation.

To learn more about hidden costs of buying a home, talk to me today!