Answering this question as accurately as possible, and sticking to the answer, can save you untold stress. After all, there’s no point blowing your budget to get the place with the gourmet kitchen, if crippling home loan repayments mean all you can afford to eat is instant noodles.
To determine your budget, add up everything you earn in a month. Next, subtract everything you spend - that includes credit card payments, hire-purchase agreements, food, petrol, gym membership, THE LOT! If you’re not prepared to go without it once you buy a home, make sure you budget for it up front. The good news is rent will no longer be an expense. The sum you are left with is what you can afford to make in monthly repayments. That doesn’t mean you should borrow to this full amount. Leave wiggle room in case interest rates go up.
This handy online budgeting tool will crunch the numbers for you.
To help you avoid any unwanted surprises along the way, budget on paying all of the following costs:
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Deposit |
Expect to pay around 5-20% of your property’s value as a deposit. Obviously the bigger your deposit, the smaller your repayments. We’re happy to lend existing Bankwest customers with a good credit history up to 95% of a property’s value and new customers 90% (conditions apply). |
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Lenders' Mortgage Insurance (LMI) |
If you’re borrowing over 80% of your home’s value banks require you to take out LMI. This insurance protects the bank in case you default on the loan. You can either pay a one-off premium or have the fee added to your loan amount. |
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Loan Application Fee |
This standard, upfront establishment fee covers the preparation of your loan application documentation, legal fees and one standard valuation. |
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Legal / Conveyancing |
You’ll need to appoint a Settlement Agent to complete the purchase of your property for you. If your real estate agent can’t recommend someone, visit the Settlement Agents Supervisory Board website. |
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Government Fees |
The price of your property will determine how much you pay for Stamp Duty, Land Transfer Fees etc. Your Bankwest consultant will spell out exactly what government fees you are up for. |
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Home & Contents Insurance |
Accidents don’t just happen to other people. Most lenders will require you to take out Home & Contents Insurance as fire, storm damage or burglary can prove financially devastating. Your Bankwest consultant can arrange a quote through Vero Insurance. |
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Inspection Fees |
When it comes to property, it’s buyer beware. A Building Inspection and Pest Inspection will ensure you new home doesn’t come with any nasty, costly surprises like termites or structural damage. Make sure the company you choose is fully licensed and insured. If you're buying at auction, ask the agent if someone has already commissioned inspections – you may be able to get a copy at a discounted price. |
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Utility Connections |
It won’t be a dream home without gas, electricity and running water. You will need to pay to have the utilities connected or transferred. |
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Council Rates |
Ask your local council or ask the real estate agent what local fees apply. |
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Stamp Duty |
This varies in each state and can be very substantial, so make sure you budget for it. |
If you are entering the property market for the first time, you may be eligible for the $7000 Federal Government’s
First Home Owner Grant
Grant (FHOG). Don’t worry about the paperwork, we’ll do it for you and have the grant ready for settlement.
Depending on which state you live in, you may also be entitled to stamp duty rebates or exemptions. Click on the link below for your state to see if you qualify, or ask your Bankwest consultant.
You may also be entitled to a government renewable energy rebate if you purchase items such as a rainwater tank. Actual rebates vary by state, but to find out more about the government’s Energy Efficient Homes Package visit their web site.
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Helping you through the home loan process.
© 2013 Copyright Bankwest, a division of Commonwealth Bank of Australia (Bankwest) ABN 48 123 123 124 AFSL / Australian credit licence 234945. All rights reserved.To use this Website, you are required to read the Financial Services Guide (which you agree to be provided by accessing the link). Bankwest is a division of Commonwealth Bank of Australia, which is the product issuer unless otherwise stated. Rates stated are subject to change without notice. Any advice given does not take into account your objectives, financial situation or needs so please consider whether it is appropriate for you. For deposit and payment products, please ensure you read and consider the Product Disclosure Statement (which you agree to be provided through this link) before making any decision about the product(s). For lending products, lending criteria and fees and charges apply. Terms and conditions apply and are available on request.
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