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When considering the purchase of a property or refinancing your current loan, it's vital to take into account the various expenses involved in setting up a mortgage.
These costs may include government stamp duty and registration fees, solicitor or conveyancing costs, building and pest inspections, as well as loan application fees.
It's important to understand that these expenses can vary significantly depending on factors such as your location, loan amount, property value, and the lender you choose.
Navigating Mortgage Costs in Melbourne
For example, if you're looking to buy an established home in Melbourne for $1,000,000 as your principal place of residence with a 20% deposit, you can anticipate the following costs:
Stamp Duty: $55,000
Conveyancing Cost: $1,500
Lender Fees: $0 to $800 (depending on the lender)
Total: $56,500 to $57,300
In the case of a refinance, you would primarily need to consider lender fees and mortgage registration costs. We estimate the "switching costs" to be around $800 to $1300. It's worth noting that certain lenders may offer cashback incentives of up to $4,000 to cover these expenses.
If your deposit is less than 20% or you have less than 20% equity in your home available to refinance, you'll also need to factor in Lenders Mortgage Insurance (LMI). LMI costs can vary depending on factors such as the loan amount, lender, and purpose of the funds. However, it's important to be aware that LMI waivers are possible in certain circumstances.
Optimising Your Mortgage
Refinancing your mortgage can offer numerous benefits and an experienced Mortgage Broker can play a vital role in assisting clients navigate this process. The primary reason to refinance your loan is for a lower interest rate and associated fees, which will in turn reduce your monthly repayment.
Refinancing also gives you the ability to access your home equity by borrowing additional funds for home improvements, debt consolidation or other financial needs.
Part of the refinance process includes determining how quick you can repay your mortgage. A Mortgage Broker should be able to assist you with a budget as well as determining the realistic timeframe your mortgage can be repaid. A good broker will have access to all the big lenders as well as other smaller lenders.
Keep in mind that some Mortgage Brokers have access to other professionals that can add value to your mortgage pathway. These include Financial Planners, Accountants and Solicitors.
Mortgage Planning for Homeownership
Planning for homeownership can be challenging, but a very exciting time! Mortgage brokers play a crucial role in helping you plan and budget and facilitate a smooth journey towards owning a home.
A very important part of planning for home ownership is your deposit. Speak to your broker who can determine the required deposit for a home. They can also provide you with information on government grants, 100% mortgages etc.
Mortgage Brokers should also be able to provide you with free property reports on prospective properties you are considering.
Choosing the Right Mortgage Broker
We recommend reading Word of Mouth reviews to find out what actual clients think of a particular Mortgage Broker. Make a short list and phone them to set up a time to meet and get to know them. It’s always easier to deal with a broker you feel comfortable with, who communicates clearly and who understands your needs.
Do they have a wide range of lenders to choose from? A larger pool of lenders is a good signal that you’ll be able to get a more competitive rate. How long have they been in business? The more established they are, the more experience and knowledge they bring to the table when it comes to choosing the right loan products to suit your circumstances.
All Mortgage Brokers are required to act in your best interest. It can be an exciting experience buying or refinancing property when you have received good advice and amazing support along the way.
Written by:
Will Rademeyer
Will founded Mortgage Box in 2004. Since then, he has built an award-winning team that is passionate about assisting people with financial solutions. Mortgage Box assists clients county-wide.
Disclaimer: The information provided is general in nature and intended for informational purposes. It is highly advisable to consult with a mortgage professional or financial advisor that knows your individual circumstances.
