Buying your first home is an exciting milestone, but it’s important to remember that there are other costs to consider besides the deposit and mortgage repayments. In addition to the upfront costs of buying a property, there are also ongoing expenses to budget for when taking out a first home loan in Australia.
Q: What other costs do I need to consider when taking out a first home loan?
- Lender’s mortgage insurance (LMI) – If you have a deposit of less than 20%, you may need to pay LMI. LMI is a one-off fee that protects the lender if you default on your loan. The cost of LMI can vary depending on the size of your deposit and the amount you borrow, but it can add thousands of dollars to the cost of your loan.
- Stamp duty – Stamp duty is a state or territory government tax that is payable when you buy a property. The amount of stamp duty you pay will depend on the value of the property and the state or territory you are buying in. Stamp duty can be a significant cost, so it’s important to budget for it when planning to buy your first home.
- Conveyancing fees – Conveyancing is the legal process of transferring ownership of a property from the seller to the buyer. Conveyancing fees can vary depending on the complexity of the transaction and the state or territory you are buying in. They typically include the cost of property searches, preparing legal documents, and settling the transaction.
- Building and pest inspections – Before you buy a property, it’s important to have a building and pest inspection carried out to identify any potential issues with the property. The cost of these inspections can vary depending on the size of the property and the location.
- Home and contents insurance – When you take out a home loan, you will need to have home and contents insurance to protect your property and belongings in case of damage or theft. The cost of insurance will depend on the value of your property and the level of cover you require.
- Council rates and utilities – As a property owner, you will need to pay council rates, water rates, and other utilities such as gas and electricity.
Make sure you factor these costs into your budget to avoid any unexpected surprises down the track. Speak to a mortgage broker or financial advisor if you need help understanding these costs and planning your finances.