What to consider when buying your first home
Nowadays, some would say purchasing a property is more commitment than entering into a marriage. In fact, a greater amount of money and documentation is required for this transaction to occur. The following information is to assist couples purchasing their first home to help you understand what is required when entering into this type of financial commitment.
You will be required to have at least a 5% deposit of the purchase price and in some cases you may need to provide evidence of a genuine savings history. Genuine savings does not include things such as sale of an asset (eg a vehicle, a gift or a lump sum deposit.)
Lenders Mortgage Insurance
Lenders mortgage insurance is payable when you are unable to provide a 20% deposit of the purchase price or valuation of the property. The is a one off premium payable to the mortgage insurer, which covers the lenders loss should you default on the loan and the financial institution is unable to recoup 100% of the loan balance from the sale of your property. The premium can be added to the loan or paid in cash upfront upon settlement of the property. This is a tiered premium structure, therefore the more deposit you can provide, the lesser the premium will be.
In addition to your deposit you must have money for the fees and government charges such as the stamp duty and transfer fee. These fees are a necessary evil that a lot of people do not consider. It is the largest component of fees collected when purchasing a house. These fee differ from state to state in Australia, with South Australia being one of the highest charged states. This is calculated on the purchase price. Use our Stamp Duty Calculator to work out what you will be charged.
Banks can charge a range of different fees, depending on the loan amount and package they offer. Some common fees to consider are: application fees, annual package fees, monthly fees and valuation costs.
One of the most important people to speak to is a Conveyancer. A Conveyancer is a licensed and qualified professional whose job it is to provide advice and information about the sale of a property, prepare the documentation and conduct the settlement process. This is the person to discuss with you the structure and ownership of the title. An example of this structure is “joint tenants vs tenants in common”. There is also a cost involved for a Conveyancer to act on your behalf .
Some may find this information overwhelming, however at Beyond Bank we can make this life changing financial commitment a breeze. Contact us for a pre approval today!