What are the costs to consider?
Before you apply for a home loan, you need to figure out how much you can afford to pay each month.
Don’t forget the extra costs
The ‘real’ amount you can afford in repayments is affected by your lifestyle and other commitments, such as other loans you may have. It will also be affected by the ongoing costs involved in owning your own home, such as:- Land and water rates
- Electricity and gas
- Strata charges
- General maintenance.
To get an accurate grip on these figures, you’ll need to do a budget. This will show what your expenses (outgoings) currently are, and how much you have ‘left over’ from your income.
You can also get an idea of how much a typical lender would be prepared to lend to you by using our Borrowing Power Calculator.
Then use the Loan Repayments Calculator to work out what the monthly repayments would be on various figures.
You’ll then have a pretty good idea of the costs involved in taking out a home loan, and how much you can afford without overstretching yourself.
Other costs to factor in
When you’re buying a property, there are also costs associated with the purchasing process. You’ll need to budget for:
- Stamp duty
- Pest and Building reports
- A strata search (usually if you’re buying an apartment)
- Conveyancing costs (the legal fees)
- Loan application fee
- Insurance, which could include Lender’s Mortgage Insurance and your own Mortgage Protection Insurance as well as property insurance
To get an accurate understanding of these costs, it’s a good idea to meet with a broker or your lender early on. You’ll then know what to expect, and can budget accordingly.
