Purchase Stamp Duty
Purchasing property in Australia attracts a state government tax. Stamp Duty is paid by the purchaser of the property and is calculated on the amount paid for the property. Importantly, purchasers are liable to pay Stamp Duty even where they have not borrowed to purchase the property. That said, First Home Buyers are eligible to apply for the First Home Buyers Concession.
Mortgage registration fee
This is a fee charged by the Land Titles Office for adding the lender’s mortgage on to the title record for the property. This fee is paid by the borrower and can cost up to $125.
Property transfer fee
The Property Transfer Fee is an amount paid by the borrower to register the transfer of title of property from the seller.
Lender’s Mortgage Insurance
Generally, lenders will require borrowers to pay Lender’s Mortgage Insurance where the total amount leant exceeds 80%. It is a common misconception that LMI protects borrowers against adverse outcomes. In reality, LMI only protects the lender against loss incurred in the event the borrower defaults and the property is sold. The insurer will reimburse the lender any shortfall between the outstanding loan amount and the amount pad for the property at auction. Importantly, LMI is not to be confused with Mortgage Protection Insurance. Unlike LMI, MPI assists the borrower with making mortgage repayments during certain instances of hardship.
In most cases, LMI can be added to the total loan amount.
Certain lenders will charge borrowers a fee for applying for the loan. In most cases though, the fee will only be payable where the borrower proceeds with the loan. In a bid to attract new business, many lenders now offer promotions where they waive the application fee. Generally, the application fee will range from $150 to $400. That said, many lenders now offer home loan rebates. These rebates can range from $800 to $1500 and can be used to offset the application fee.
Before a loan can be settled, lenders will ask that the security property is covered under a building insurance policy. The insurance protects the owner of the home in the event that the home is damaged by fire or some other unforeseen event.