Do your financial homework!

Before you leap into the property market for the first time, make sure you know exactly how much money you’ll have to fork out to get the perfect home. The real cost of buying a house is far greater than the actual sale price of the property.

On top of your deposit, there are substantial expenses associated with buying a home and it’s essential that you draw up a comprehensive list of these to avoid any last-minute surprises. Within this website we guide you through the maze of fees and additional expenses you are likely to incur when buying a property. These are estimates only, as costs differ from state to state. Some of the costs involved even depend on the amount you’re borrowing and the price of the property. For final figures, please meet with a RAMS Home Loans specialist.

Home loan application fees

Almost all lenders charge a loan application or establishment fee on new home loans, which can be as much as $1000. There may also be home loans available that have no application fees, but it is important to talk to your home loan consultant about what is best for you because home loans with lower upfront fees may have higher ongoing interest rates, or may not have all the features you need. 

Valuation fees & lenders’ legal fees

Your lender is likely to require the property you are buying to be valued by a registered valuer to ensure you are buying it for what it is worth. This cost is about $300 and it is usually incorporated into the total loan application fee.

Some lenders may also charge a separate fee for their legal costs, which could add up to $500 to your upfront loan fees.

Should you consider debt consolidation?

If you’re disciplined with finances, combining personal debts with your mortgage may help you save on monthly repayments. But discipline is the key!
If you have credit or store card debts, personal loans or car finance you may be able to combine all such debt with your mortgage. 

Debt consolidation can lower the rate of interest payable and your overall monthly loan repayments on your current debt.
But remember a lower interest rate over a longer borrowing term might mean lower repayments for your current debt but the downside is that it could result in paying more interest, in total.

If you decide to consolidate your debts, increasing the repayment amounts on your new home loan by the amount you were repaying on your other debt/s may mean those debts are paid off sooner and you should be financially better off. Check out our repayment calculator. 

The biggest potential drawback of debt consolidation is that for some borrowers it does not solve their problems. If you lack financial discipline, the root cause of your initial debt/s must be addressed or your spending may spiral out of control.  If it was lack of discipline and/or financial skills that caused the debt in the first place you should consider cutting up your credit cards and closing the store card accounts to minimise the temptation to get deeper in debt.

Make a budget plan

When buying your first home it’s essential that you make a detailed budget plan of all your expenses to help manage your new financial situation.

There are plenty of good budget planners on the internet. For most of them, all you need to do is enter the amounts in the fields listed and the planner will give you a rough guide to your savings and borrowing capabilities and the amount of funds you’ll need to buy the home. It will help you determine whether the required repayments are within your budget and highlight expenses you may need or wish to cut. Once you’ve finished your calculations, you can usually save the budget plan on your computer or print out a copy.

Have a look at our easy to use Budget planner now!

Or check out these other online budget planners:

• MoneySmart - run by the Australian Securities and Investments Commission (ASIC)
• InfoChoice Budget Planner Calculator - run by InfoChoice Limited, an Australian independent ‘infomediary’ for financial and investment services