Choosing a Home Loan – Costs to Consider
If you are weighing up your options when it comes to home loans, you will want to look beyond the interest rate to determine what your total costs will be.
A number of common fees and charges are associated with many home loan products – and it is important to have a solid understanding of these before you make your final decision, especially if you are a first home buyer.
Depending on your lender, you may be charged an establishment fee and application fee upfront – and some may also charge a valuation fee to value the property. Australian consumer watchdog Choice asserts that valuation fees are particularly important to be aware of, as you may have to pay this fee regardless of whether or not your loan is approved.
In some circumstances – usually if you intend on borrowing 80 per cent or more of the value of your property – you may also be required to take out lenders mortgage insurance – and of course, it is also wise to check on any exit penalties or any other costs associated with making additional repayments or paying off your loan early.
Choice advises comparing home loans using a figure known as the annualised average percentage rate (AAPR), which takes interest rates and other fees and charges into account. Your local mortgage broker can help you calculate this figure.
Of course, you'll want to add in any other one-off fees and charges – such as stamp duty – when calculating the cost of your new home purchase.
To get more detailed information on your situation, talk to a Loan Market mortgage broker todayTags: first home buyers, home loans, Stamp Duty