Spending half a million dollars (or more) on a home and wondering if you've made the right decision is stressful enough. The last thing you need is unexpected costs coming out of the woodwork and making life even more difficult for you.
But the fact is that first home buyers are often stunned by how much more property costs than the sale price, which can often spell disaster for their finances.
To help make sure you know exactly what you're getting into, we've whipped up a quick run through of three costs that may be unexpected when buying property.
Lender's mortgage insurance
If you're borrowing more than 80 per cent of your home's value you may have to pay lenders mortgage insurance (LMI), as the bank may identify you as a high risk borrower. This charge comes as a one off fee that your lender will use to insure them in case you default on your loan.
The amount varies from bank to bank, but in general it's a good idea to try to avoid LMI completely, as such a loan may also come with higher interest rates. You can do this by either borrowing less than 80 per cent of the home's value, or by having someone act as a guarantor for your home loan.
Just as your home costs more than its sale price, your mortgage costs more than the interest rate.
Just as your home costs more than its sale price, your mortgage costs more than the interest rate. In fact, there's a myriad of different costs involved, including establishment fees, late payment fees, and even a fee charged when you pay the loan off.
It's essential that you are aware of all the charges involved, so let an experienced mortgage broker lend a helping hand. We can help make sure that you're aware of every cost, every step of the way.
Stamp duty is a hefty fee indeed, one that often surprises and shocks first home buyers. It varies from state to state and scales with the purchase price of your property, so it's always best to check with your mortgage broker or local governing body to be sure you know how much it will be.
Feel free to use Mortgageport's stamp duty calculator in the mean time, which will give you a rough idea of the figure so that it doesn't come as a surprise.
If you need anymore guidance with your home loan, or the home buying process in general, get in touch with the expert team at Mortgageport.