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As with your budgeting calculator, this calculator will be particularly useful when viewing a property and considering placing an offer. Many additional costs apply when purchasing a home, and you should ensure that the total loan required figure matches or is under the affordable figure that you originally calculated.
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A brief explanation of each cost is as follows:
What a House Costs
Property Purchase Price
The price you expect to pay for the property
Registration of transfer fee & mortgage registration fees
These prices through landgate are typically between $300-$700 dollars.
Click the following link for a detailed list of prices.
Property Stamp Duty
If you are a first home buyer, a concessional rate of transfer duty will apply if the value of the dutiable property is below certain thresholds.
As at 3 July 2014 the First Home Owner Rate of Duty applies to a dutiable transaction with a dutiable value of up to $530,000 for a house and land, or $400,000 for vacant land. See http://www.finance.wa.gov.au/cms/State_Revenue/Duties/Rates/Rates_of_Duty.aspx for the rates of duty.
Lenders mortgage insurance
Lenders mortgage insurance is an insurance that the lender utilises to protect them against you defaulting your home loan repayments. This complex calculation has many dependents, and as such a guide price will be provided.
Most lenders will charge LMI if a loan-to-value ratio exceeds 80%. For example, if a $500,000 property is purchased, LMI will be payable if the loan amount exceeds $400,000 dollars.
Some lenders may offer higher LVR thresholds for LMI and reduction of this payment may be achieved through a security guarantee, another reason a mortgage broker should always be consulted when considering the purchase of property.
For the purposes of your financial feasibility, the following table can be used as a guide. Note that the following table is based on full documentation loans and that properties purchased by self-employed persons or investors usually add further additional loading.
What a House Costs
Property Purchase Price
The price you expect to pay for the property
Registration of transfer fee & mortgage registration fees
These prices through landgate are typically between $300-$700 dollars.
Click the following link for a detailed list of prices.
Property Stamp Duty
If you are a first home buyer, a concessional rate of transfer duty will apply if the value of the dutiable property is below certain thresholds.
As at 3 July 2014 the First Home Owner Rate of Duty applies to a dutiable transaction with a dutiable value of up to $530,000 for a house and land, or $400,000 for vacant land. See http://www.finance.wa.gov.au/cms/State_Revenue/Duties/Rates/Rates_of_Duty.aspx for the rates of duty.
Lenders mortgage insurance
Lenders mortgage insurance is an insurance that the lender utilises to protect them against you defaulting your home loan repayments. This complex calculation has many dependents, and as such a guide price will be provided.
Most lenders will charge LMI if a loan-to-value ratio exceeds 80%. For example, if a $500,000 property is purchased, LMI will be payable if the loan amount exceeds $400,000 dollars.
Some lenders may offer higher LVR thresholds for LMI and reduction of this payment may be achieved through a security guarantee, another reason a mortgage broker should always be consulted when considering the purchase of property.
For the purposes of your financial feasibility, the following table can be used as a guide. Note that the following table is based on full documentation loans and that properties purchased by self-employed persons or investors usually add further additional loading.
Find which LVR band is applicable to you and insert the percentage on your financial feasibility calculator. For example, if I am purchasing a property for $500,000 and I have a $70,000 deposit, my LVR will be 86%. As my property is to be purchased for $500,000, I will find my percentage in the third column ($300,001-$600,000). My percentage is 1.06%.
Note that the state government will also apply additional charges to this cost, which have also been added in your feasibility calculator.
Buyer's Agent
Conveyancing / Settlement Fees
Generally the engagement of a settlement agent will equate to 0.2% of the purchase price. You should always ask for a quotation from your settlement agent prior to their engagement, and additional costs may be applicable should you seek further advice. Our recommended settlement agents would be happy to discuss your needs.
Building Pest & Pool Inspections
Most building inspectors provide a price list on their website. An example of this is here. It is a good idea to have the same inspector conduct both the building and pest inspection. We will talk about this in further detail later. As a general guide, for a comprehensive building and pest inspection you should expect to pay between $600-$1000. Contact Cap-It-All Building Inspections for a firm quotation.
Loan Application Fee
This is charged by the bank for preparing the loan documents, undertaking a valuation of the property as this will be used as security, and obtaining details of the certificate of title. Some lenders waive application fees, another good reason to engage a broker, as they will have a good handle of the offers that are currently available. Typically this fee is around $600.
Loan Settlement Fees
This is another fee that a bank may charge when your loan transfers. This fee is charged by the bank to process the settlement of your loan. For the purposes of your financial feasibility these charges are estimated to be between $200-$600. However, these charges can vary greatly depending on the loan product selected. For example, charges may apply if you wish to fix your interest rate or if a contract variation is required during the buying process. For this reason it is important to obtain a key facts sheet prior to making any decision.
Your Contribution
Genuine Savings
This is any savings you have accumulated as the result of steady, regular saving. Although not a pre-requisite when applying for a loan, it is a good idea to make regular repayments to your savings bank account for at least three months prior to applying for a loan. This will not only strengthen your loan application, but allow you to proceed in the confidence that you can budget efficiently in the future.
Gift (if applicable)
This may be money gifted to you, or acquired by means other than saving.
First Home Owner Grant (if applicable)
First homeowners may be eligible for a one-off grant provided that they satisfy all the eligibility criteria. For more information please visit http://www.finance.wa.gov.au/cms/State_Revenue/FHOG/First_Home_Owner_Grant.aspx
Other government incentives
A range of different incentives are available for first home-buyers. Currently first home-buyers purchasing property under $400,000 may be eligible for a grant of up to $2,000 for expenses such as mortgage registration fees, solicitor and/or conveyancing fees, valuation fees, inspection fees, establishment fees, mortgage insurance premiums and lending institution fees associated with lodging the application. For further information please visit http://www.commerce.wa.gov.au/consumer-protection/home-buyers-assistance-account
Other funds / equity
If you are not a first home-buyer, you may be able to use the equity you have in your current home for your next purchase. If you are planning to keep your current property, bear in mind you will not have access to all of the equity in your current home. A mortgage broker should be consulted for further information.
Upon completion of the above fees you are now able to reasonably establish the affordability of making an offer on a property. If the total loan required for your buying costs are equal or less than the amount you can afford to borrow, then you are ready to make an offer!
Note that the state government will also apply additional charges to this cost, which have also been added in your feasibility calculator.
Buyer's Agent
Conveyancing / Settlement Fees
Generally the engagement of a settlement agent will equate to 0.2% of the purchase price. You should always ask for a quotation from your settlement agent prior to their engagement, and additional costs may be applicable should you seek further advice. Our recommended settlement agents would be happy to discuss your needs.
Building Pest & Pool Inspections
Most building inspectors provide a price list on their website. An example of this is here. It is a good idea to have the same inspector conduct both the building and pest inspection. We will talk about this in further detail later. As a general guide, for a comprehensive building and pest inspection you should expect to pay between $600-$1000. Contact Cap-It-All Building Inspections for a firm quotation.
Loan Application Fee
This is charged by the bank for preparing the loan documents, undertaking a valuation of the property as this will be used as security, and obtaining details of the certificate of title. Some lenders waive application fees, another good reason to engage a broker, as they will have a good handle of the offers that are currently available. Typically this fee is around $600.
Loan Settlement Fees
This is another fee that a bank may charge when your loan transfers. This fee is charged by the bank to process the settlement of your loan. For the purposes of your financial feasibility these charges are estimated to be between $200-$600. However, these charges can vary greatly depending on the loan product selected. For example, charges may apply if you wish to fix your interest rate or if a contract variation is required during the buying process. For this reason it is important to obtain a key facts sheet prior to making any decision.
Your Contribution
Genuine Savings
This is any savings you have accumulated as the result of steady, regular saving. Although not a pre-requisite when applying for a loan, it is a good idea to make regular repayments to your savings bank account for at least three months prior to applying for a loan. This will not only strengthen your loan application, but allow you to proceed in the confidence that you can budget efficiently in the future.
Gift (if applicable)
This may be money gifted to you, or acquired by means other than saving.
First Home Owner Grant (if applicable)
First homeowners may be eligible for a one-off grant provided that they satisfy all the eligibility criteria. For more information please visit http://www.finance.wa.gov.au/cms/State_Revenue/FHOG/First_Home_Owner_Grant.aspx
Other government incentives
A range of different incentives are available for first home-buyers. Currently first home-buyers purchasing property under $400,000 may be eligible for a grant of up to $2,000 for expenses such as mortgage registration fees, solicitor and/or conveyancing fees, valuation fees, inspection fees, establishment fees, mortgage insurance premiums and lending institution fees associated with lodging the application. For further information please visit http://www.commerce.wa.gov.au/consumer-protection/home-buyers-assistance-account
Other funds / equity
If you are not a first home-buyer, you may be able to use the equity you have in your current home for your next purchase. If you are planning to keep your current property, bear in mind you will not have access to all of the equity in your current home. A mortgage broker should be consulted for further information.
Upon completion of the above fees you are now able to reasonably establish the affordability of making an offer on a property. If the total loan required for your buying costs are equal or less than the amount you can afford to borrow, then you are ready to make an offer!