How much is a home loan? Here are the costs

Thinking about buying your first property? 

  7 minutes

While it’s an exciting time in your life, it can also be daunting. Discover our guide that outlines the home loan costs you need to prepare for before you sign that contract.

Know what you can afford

When buying a first home, you can never be too prepared. Understand how much you will need to save for a deposit, what price points are practical and sensible for your current situation and all the other home loan costs that you’ll need to have ready before and at settlement.

Be prepared for any additional home loan costs

When a lot of first-home buyers run the numbers, they neglect to factor in some additional costs. They plan for their deposit but leave out the huge upfront costs that come with buying any property.

Depending on what type of property it is you’re buying - a home or an apartment - there are inspection reports to factor in, solicitors’ costs, government fees and charges, local council taxes, stamp duty, Lenders Mortgage Insurance (LMI), strata fees, and the list goes on. Buying a property is one of the biggest investments you’ll ever make, so it’s important to know the ins and outs of buying and be prepared ahead of time to cover these costs.

Stamp duty 101

When you buy a property, stamp duty (a duty on the sale or transfer of land) can significantly add to the overall cost. To prevent any unwanted surprises, it’s important to factor this into your budget. How much stamp duty you’ll be expected to pay depends on the state you’re buying in, the purchase price and the type of property. Try our stamp duty calculator to work out how much stamp duty you’ll owe with your home loan. 

Hint: When buying a first property, try looking into whether or not you’re eligible for the First Home Owner Grant (FHOG). It is a government initiative and can save you thousands in fees and duties. The FHOG will vary in different states and territories.

Lenders Mortgage Insurance

If you can put down a deposit of less than 20 per cent of the purchase price, some banks will also insist on another cost, which is known as Lenders Mortgage Insurance (LMI). In the event you’re unable to repay the loan, LMI acts to protect the lender. BOQ Specialist doesn’t insist on LMI for approved clients who are medical, dental or veterinary professionals.

Property inspections are a must

Whatever type of property you’re buying, a building inspection by a third party is a must. It’s a worthwhile investment for a number of reasons, including:

• It can bring any potential problems to light before you exchange on the property.
• It could assist you in negotiating a better price.

Consider the ongoing costs

Essentially, the less you have to borrow, the better. Having a larger deposit can make a difference in the long run. A big deposit can mean lower regular repayments and, as a bonus, you’ll be paying less in interest over the lifetime of the loan.

In the market for a home loan? Click on the link to find out more about our home loans. Ready to take the next step? Contact us to find out how we can tailor a finance solution for you, or call us on 1300 131 141.