Five Hidden Costs Which Could Send You Bust

You’ve saved a large enough deposit to buy your first home. You’ve even arranged a mortgage after shopping around for the best deal. You’ve even found a solicitor or conveyancing company who’ll do a great deal on costs for you. You think you’ve covered all your bases… or so you think.

There are lots of costs to consider when you buy a home in Narellan.

1. Bank Fees
Bank fees are almost insidious. They creep into almost every transaction we undertake these days. If you are withdrawing or depositing money you can be certain you’ll attract Bank fees. By shopping around to find a great bank with less fees you can experience substantial savings over time.

Potential Saving: Various, around $250.00

2. Building Inspection
Many motor vehicle buyers wouldn’t consider the purchase of a second-hand car without
mechanical inspection to check the on road worthiness of the vehicle. In the same fashion, it makes good sense to have a professional look at the home you are about to buy to check on all those hidden issues you can’t always see. This may be an extra cost but it’s money well spent. Shop around to find savings.

Potential Saving: $200.00 – 400.00

3. Council Rates/Water Rates
If the owner of the property you are about to buy has paid his or her local Council Rates or Water Rates in advance you will be expected to reimburse them on settlement. Your solicitor/conveyancer will calculate the extra costs you are to pay and arrange payment. These days rates of both types are usually paid quarterly so the most you would be expected to reimburse would usually be no more than 3 months worth of Council and / or Water rates.

Potential Savings: Various

4. Mortgage Application Fee
When you apply for a mortgage with a bank or lending institution you will generally be
charged this fee. In most cases these days the Mortgage Application Fee also includes one property valuation that is often worth (over) $300.00 by itself. The balance of the fee
offsets the banks costs of reviewing your application. Shop around for a good deal.

Potential Savings: $200.00 – $600.00

5. Mortgage Insurance
If you are borrowing more than 80% of the value of the property you can expect to pay Mortgage Insurance. This is the way the bank offsets its risk by insuring the home loan against default. This can be quite expensive, depending on your home. Be sure to check these costs in advance.

Potential Saving: From 1% to 1.75% of the purchase price for a 95% home loan.

But don’t despair – think about the millions who have been through the home buying process before you. They didn’t have the advantage of this inside information. They simply coped with these extra costs as they occurred. Now, because you are aware of these extra costs, you can budget and allow for them. And at the end of the process you’ll have a new home and a balanced bank account.

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