When taking out a mortgage, many people focus only on the purchase price of the property and forget about the additional fees and expenses involved in the process.
Understanding these extra costs ahead of time can help you budget more accurately and avoid unexpected financial pressure.
Home Loan Application Fees
Most lenders charge a home loan application fee, which can vary depending on the lender and the type of loan you choose.
These fees may cover:
- Preparation of loan contracts
- Property title checks
- Credit checks
- Attending settlement
Mortgage Fees and Costs
- Mortgage establishment fees: A fee charged by the lender to set up your mortgage.
- Property valuation fee: A third-party valuer assesses the value of the property and any improvements.
- Mortgage registration: Your mortgage deed must be registered with the government, and some states may charge stamp duty for registration.
- Lenders Mortgage Insurance (LMI): If your deposit is less than 20% of the property value, lenders may require LMI to protect themselves against the risk of default.
Property Fees and Costs
- Building, pest and electrical inspections: Inspections help identify structural, pest or electrical issues before purchase.
- Registration of transfer fee: The new ownership of the property must be officially registered.
- Legal fees: Solicitors or settlement agents usually charge fees to manage the property transfer process.
- Home and contents insurance: Lenders require the property to be insured while a mortgage is in place.
- Life and income protection insurance: Borrowers may wish to protect themselves and their income during the life of the loan.
- Utility connection costs: Connecting electricity, gas, internet and phone services may involve setup fees.
- Council rates: Local councils charge rates for services such as waste collection and community infrastructure.
- Water rates: Water authorities charge fees for water supply and maintenance.
- Strata or body corporate fees: Apartment and strata properties often involve ongoing body corporate costs, especially in buildings with lifts, pools or shared facilities.
- Maintenance costs: Regular maintenance and repairs should always be factored into your ongoing property expenses.
