What are the real costs of getting a mortgage?
It’s expensive business buying a house!
Forget the sale price, you’ll need to keep your EFTPOS card handy as there are a few other costs to consider, though not all are essential – so don’t fret yet!
Here are some costs to consider:
Low Equity Fees
Dependent on your loan value
If your deposit is under 20% you will get stung with low equity fees. Some banks charge a higher interest rate – anywhere from 0.25% to 2% – while others slap on a one off fee of up to 2% of your loan (it can normally be included in your total mortgage). It’ll hurt either way, so we’ll help you figure out the right way to go to minimise the pain.
$400 – $750
A registered valuation will give you a better picture of a home’s current ‘on the market’ value. It’s much more accurate and current than a CV (Capital Valuation) produced by the council.
$500 – $2000
To complete the purchase you’ll need a solicitor. Your lender may provide a cash incentive to put towards legal fees, but it’s best to bank on spending about $1500.
Smart move to have a proper building inspection done, and most banks require it as a condition of purchase.
$600 – $900 pa
Banks definitely require you to have the house insured so that if it burns to the ground, gets flooded or you accidentally drive the car through the garage wall, it can be repaired.
$265 or $365 if urgent
A Land Information Memorandum… sounds like gobbledygook, but a LIM is really important as it outlines any extra info held against the property which could be valuable before purchase. For example resource consents, special land features, any rates owing, and much more.
$250 – $1000 pa
Banks don’t require this but it’s a totally sensible, grown up thing to do. You’re about to take on a chunky liability so covering your backside makes sense.
$500 – $1000 pa
If the property’s used as an investment, accountancy fees could come into the mix, and will crop up annually.
That probably looks more scary than it actually is! Not everything is essential. But it is best to go in to house hunting mode with your eyes wide open to avoid any nasty surprises. If you’re worried about all those extras, we can help you work through them before you begin your property search.