Costs
Lending Fees
When you put less than 20% of your own resources into a purchase the banks perceive the loan they give you as being ‘higher risk’. There are two ways banks handle this problem:
LMI Fee – One way they offset that risk is to buy insurance cover so that if the loan turns to custard they can get their money back. LMI fees are a one off amount, paid by you to buy cover for the bank.
Higher Interest Rate – the bank increases the interest rate it charges for so long as your loan remains above a certain threshold.
Application Fee - Believe it or not it does cost the lender something to assess your application and this fee reflects the effort involved. Banks will often waive this fee.
Purchase Costs
Property Inspections – building reports and the like are well worth the effort in our opinion. Every year we come across people who have ended up buying a problem that could have been easily avoided if they had an inspection done from the outset.
Registered Valuations – often required by the banks when your deposit is less than 20% but even if it’s not mandatory they can still be a good idea as they do reveal a lot about a property.
Ongoing costs of ownership
Don’t forget to factor the following into your budget:
- Council rates
- Water rates
- Regional rates
- House Insurance
- Maintenance costs
