Are you in the market for a new home and feeling overwhelmed by all the financial jargon? Well, you’re not alone! Buying a home is one of the biggest investments you’ll ever make, so it’s important to know what you’re getting into.
One aspect that often gets overlooked is the various fees, costs and charges that come with a home loan. So, we’re here to break it down for you and make sure you’re not caught out by any hidden costs!
Loan Application Fee
Let’s start with the loan application fee – this is a fee charged by the lender for setting up your loan.
It can vary between lenders but typically costs between $300 and $1,000. Don’t panic though, some lenders may waive this fee altogether.
Property Valuation
Next up is the property valuation fee – the lender may charge you a fee to have the property independently valued. This is usually carried out before loan approval and will be charged even if the loan is not approved. The fee is based on the property’s value and is usually around 0.1% – so, a $300,000 property valuation will incur a $300 fee.
Property and Title Search
You’ll also encounter a property and title search fee – a government fee charged by your lender for conducting a property search. The fee varies depending on the state the title is held in and the type of property, but typically ranges from $25 to $250.
Stamp Duty
Stamp duty is another government tax charge that’s incurred at the time of sale. The fee varies from state-to-state depending on whether a property is purchased to live in or as an investment, with the rate calculated as a percentage of the purchase price of the property. The greater the home’s value, the greater the stamp duty. However, not all states charge this tax, so it’s important to check what applies in your area.
Conveyancing Fee
A conveyancing fee is a legal service fee charged at the time of property settlement. This fee is typically more than $300 and less than $1,800, and ensures all utility charges and other costs associated with home title transfer are accurate and correct at the time of sale.
Lender’s Mortgage Insurance
If the lender lends more than 80% of the property price to a borrower, then Lender’s Mortgage Insurance (LMI) is mandatory. This insurance covers the lender for loan repayment default and is usually a percentage of the loaned amount. The fee charged can range between $2,200 to $6,440, depending on the lender you’re borrowing funds from.
Annual and Ongoing Fees
Finally, there are annual and ongoing fees that are charged by banks over the duration of the loan. This can vary from bank-to-bank but is usually between $5 to $20 per month. There are also transfer fees and mortgage registration fees, which vary in each state and can range from approximately $100 to $2,250.
Don’t Let Hidden Costs Catch You Out
Don’t let hidden costs catch you out – make sure you do your research and understand all the fees, costs and charges associated with your home.
For more information, you can visit the website of the revenue office in your state or territory as shown in the table below, or get in contact with one of our brokers today so we can help you break down the costs and make sure there are no surprises when it comes to buying your home!
We’re here to help
If you have any questions regarding the fees you may face when applying for your home loan, come in and have a chat with one of our experienced brokers!
To book an appointment email us at enquiries@dominionfinance.com.au or call us at 6162 2740.
