Imagine this: You work so hard to save a deposit, only to fall just short due to some unexpected upfront costs.

Navigating the home buying process is tricky, but knowing what upfront costs you might encounter is perhaps one of the hardest steps. Whilst HomeStart specialises in low deposit home loans, there are still some fees and charges involved in purchasing a property. This will help to better prepare you for what extra costs will be needed separate to your deposit, helping you get into your own home, sooner.
 
Lending fees and charges
Mortgage set-up costs are incurred when you establish your loan and are used to cover the fees associated with administration and assessment processes. These costs will vary depending on your finance provider and may include an application fee, a loan establishment fee and documentation fees.
 
Stamp duty
Stamp duty is one of the most considerable costs you need to factor in when buying a home. It is a tax charged by the State Government for particular transactions, such as buying property, and is calculated on both the purchase price and whether the dwelling is an established house or a new build. Therefore, the larger the buy, the bigger the fee. This charge differs from state to state so using an online calculator can help to estimate potential stamp duty costs.
 
Loan Provision Charge (LPC)
HomeStart’s LPC, which differs from the Lenders Mortgage Insurance (LMI) most lenders have in place, protects the lender if a customer defaults on their loan. This insurance is required by most lenders when more than 80% of the property’s value is being borrowed. LPC is a fee that can vary from a couple thousand dollars up to $15,000, of which is additional to the deposit and upfront costs.

**From Monday 2 March 2020 through to 31 December 2020, HomeStart will be waiving its LPC fee to give borrowers the chance to pocket the extra savings. Depending on the amount borrowed, this could be between $630 and $2970.  

Pre-purchase inspections
Building and pest inspections provide you with the comfort of knowing there are no hidden problems with the property. Fees can range from $300 to $1000 - but it is money well spent as it could save you thousands in potential repair costs down the track.
 
Valuation fees
Your bank or finance provider may charge a valuation fee to assess the value of the property you are purchasing. This ensures the money they are lending you is protected. An independent valuer will generally carry out this work and the fee can vary for each valuer.
 
Legal costs
You will need professional help to transfer ownership of the property you are purchasing. A conveyancer or solicitor can carry-out this work, with most homebuyers opting for a conveyancer. There may also be additional costs for property and title searches.
 
Home and contents insurance
Lenders will need your property to be covered by home (building) insurance before approving a home loan. The cost of insurance will vary depending on the style and location of your home and its value. You will also need to set aside some money to protect your valuables with contents insurance.

 

Utility costs
When ownership of a property is transferred, a buyer needs to pay the vendor for the remaining yearly or quarterly utility rates, such as council or water rates. The costs will vary depending on the council area the property is located.