Properly calculating the cost that will be involved in purchasing a property is important to ensure that there will actually be enough funds available to fully complete the transaction on settlement day.
Common purchase costs
- Actual Property Purchase Price - This is indicated on the contact for sale of the property and should be the agreed to price from vendor and purchaser.
- Purchase Stamp Duty - Property purchase stamp duty in Australia is a state based duty and varies from state to state.
- Loan or Mortgage Stamp Duty - Mortgage stamp duty also varies from state to state in Australia.
- Rate Lock Fee - When applying for a fixed interest rate loan this fee can lock in the current fixed interest rate providing protection from increases before settlement.
- Government Fees - Government fees can also vary from state to state.
- Lender Application Fee - Most but not all loans have an application fee which is charged either up front or at time of settlement.
- Loan Package Fee - Some lenders provide an option packaging their finance products together for the cost of one annual fee. Different loan accounts, savings and transactional accounts and other products and services are offered by the bank or lender for the one annual fee. Loan application fees and other costs may be waived when a package is involved.
- Legal Costs - A solicitor or conveyancer is usually engaged by purchasers and vendors of property. Vendors and purchasers may elect to carry out their own conveyancing.
- Searches - A solicitor or conveyancer may request certain searches are performed in relation to a property being purchased.
- Reports - It is usually advisable if not an actual requirement to have building, pest and or strata reports carried out before a property settles.
- Lenders Mortgage Insurance - Certain loans will require mortgage insurance which is calculated from the actual loan size and usually has stamp duty payable which is added the premium as a calculation of the actual premium.
- Property Valuations - Some lenders may require the applicant to pay the property valuation fee where others allow on in the application process at no extra charge but with a charge for additional valuations if multiple securities are being used.
- Settlement Fee - Some lenders charge a fee for attending settlement.
- Transfer - There is usually a fee for transfer of a mortgage that varies from state to state in Australia.
- Registration - There is usually a fee for registration of a mortgage.
- Progressive Draw Downs - This cost commonly occurs where a construction loan or owner builders loan is taken out and is a fee that applies to each progress payment drawdown.
- Deposit - Add up all the fees and charges then add them to the property valuation or purchase price. Subtract the available deposit amount from the total to establish the loan size that is required.