- In First things first - Steps before applying for finance, Home sweet home - first home owner finance
When people think about budgeting for a property purchase, they usually just think about the sale price. But this isn’t the only thing you need to budget for. You need to consider additional costs, like LMI, stamp duty, your deposit, and more.
LMI – Lenders Mortgage Insurance
One key cost you need to consider is LMI, or lenders mortgage insurance. Lenders require LMI if your deposit is less than 20%. Using lenders mortgage insurance allows you to borrow more than 80% of a property’s value, which can allow you to expand your buying options. It’s very helpful for helping people with smaller deposits get into the property market.
The cost of LMI depends on the size of your deposit, the value of the property in comparison to how much you’re borrowing (LVR), and other factors.
Stamp duty is a government tax on property transactions. It can be quite costly. Stamp duty is calculated based on whether the property is a primary residence, or an investment property; if the property is a new home, an existing home, or vacant land; your residency status, and whether or not you are a first home buyer.
In NSW, there are new exemptions and discounts on stamp duty for first home buyers, which provide significant savings.
The amount you’ll need to save for a deposit can vary hugely. It of course depends on the value of the property. But it also depends on whether you’re using LMI, and individual lender policies. Lenders will take into account the postcode of the property, your financial circumstances, and other factors, when deciding how much you need as a deposit, when you apply for a home loan.
There are also other costs when buying a property. Most people will choose to use a conveyancer or solicitor. Pest inspections, and building inspections are highly recommended, and may be required by your lender. There’s also council rates and water rates to think about. You’ll generally have to pay the remainder of the year’s or the quarter’s rates.
Depending on the property, and your circumstances, there may also be other costs to consider.
The Bee Finance Savvy difference
Does all this sound a little overwhelming? It doesn’t have to be. At Bee Finance Savvy, we’ll help you to budget for all of these costs when you apply for a home loan. We’ll let you know which, if any, you can add into your loan, meaning you don’t have to pay for them up front. This is an invaluable part of our service, and lets you work out if
you’re ready to buy a property now, or if you need to save up a little more. It also helps you work out how much you can afford to spend on a property over all.
If you’d like to understand your options for buying a property, including budgeting for additional expense, get in touch now for an obligation free consult with our friendly and helpful broker Desiree.
Desiree is based in Sydney’s beautiful Sutherland Shire, and loves helping clients all over Australia reach their property goals.
If you’d like to hear from just some of our satisfied customers, take a look at our reviews on WOMO https://www.wordofmouth.com.au/reviews/bee-finance-savvy-miranda