When you think about purchasing a home or refinancing your loan, you will think about the costs associated with getting a mortgage. We are going to run through all the costs that that you may incur based on your situation, to ensure nothing is a surprise for you!
Stamp duty of Transfer of Land is the tax you must pay when buying a house or land in Victoria. All states have different methods of calculating stamp duty and when it is applicable, but we will be focusing on Victoria. It is a percentage of the price of the property you are purchasing, which is not included in the purchase price and is an additional cost. Commonly it is thousands of dollars’ worth of stamp duty, but there are exemptions the Victorian Government have in place.
As a first home buyer, you won’t have to pay any stamp duty, unless your property being purchased is over $600,000-. When you pay more than $600000- then you pay a discounted amount up to $750000- and once over $750000- you have to pay the full amount due.
There also is a Registration of Transfer included for the processing of the stamp duty and title transfer. This is also calculated on the purchase price of your property and there is no exemption for this fee.
There is a Mortgage Registration cost of $132- which is a government cost to register your mortgage in their system. This is a flat fee that only changes by a small amount annually.
An Application Fee is a lender cost that can range from $100 to $600as part of the loan being processed and settled. The lender will collect this fee at the time of settlement.
You will also have to pay Legal Fees for a conveyancer or lawyer to look over your Contract of Sale and organise settlement on your behalf. We estimate that they will be around $2,000- but this does depend on the conveyancer and the complexity of your purchase. When purchasing a property you also may pay your share or any council or water rates that have been paid by the current owner, your conveyancer will work this out and include this in your settlement figures.
Building and Pest Inspections are not mandatory but many purchasers wish to get the property inspected to ensure the condition is up to standard and has no issues before buying. This can change depending on the property and the location, but it will most likely be multiple hundreds of dollars.
If your loan is over 80% of the purchase price, you will also have to pay Lenders Mortgage Insurance (LMI) to the bank which the cost of this will increase the higher the Loan to Valuation Ratio (LVR) is. For example, if your loan is 90% of the purchase price or 90% LVR you will pay more LMI than someone with 81% LVR as there is a greater risk for the lender. But if you are utilising the First Home Guarantee Scheme, there will be no LMI payable if you have an LVR of over 80%, which you can read more about here.
You will need to purchase House Insurance prior to settlement and there may be Moving Costs that need to be considered too.
It is always handy to be aware of the additional costs of getting a home loan, that you may not have realised would come up. The best advice is to try to keep several thousand dollars spare for any incidental costs that may arise.