St.George Banks Guide to Calculating the costs of building your home
St.George home loans can be used to cover a wide range of housing needs, of these a very useful home loan is the residential construction loan that is available for when you are building your own home. It is an exciting time of your life to actually be able to witness your own home being built but like everything else in life, there are costs involved. It is for this reason that you should be fully aware of all these costs so that when the time comes you will be ready and not be placed in surprise or hardship.
Legal costs.
All aspects of home buying has to be legal. There are certain statute laws as well as regulations that have to be complied with before any property can be transferred from one person to another, to ensure you will become the legal owner of the property. This is a major reason why it is often in your interests to have a solicitor handle the legal work for you. You can do it yourself and save on paying legal fees to a solicitor but it will take you time. If you want things to go through smoothly, the hiring of a solicitor/conveyancer will give you peace of mind in knowing that it is being done right.
Stamp duty.
In order to register legal documents there are also fees involved. These fees are required by the state or territory governments, depending on where the property you are buying is located. The fees paid to government are known as stamp duty and the amount varies between each authority involved. Some states and territory governments waive stamp duty costs for first home buyers in order to encourage them to enter the housing market. The price to be paid, when required, is calculated on the value of the property being purchased.
There is also stamp duty payable on all St.George home loans, as with all other home loans. This fee is calculated on the amount of money being borrowed, the larger the amount of money being borrowed the larger the stamp duty fee that will be payable.
Title searches.
Further costs are involved to cover the work involved in making a title search. The title of the property being purchased is important in order to find out who the actual legal owner of the property is and if there are any caveats attached to the title that need paying before the title can be transferred into your name.
Land survey.
A survey of the property will have to be undertaken to ensure the property shown on the title is actually the property that is being sold. This also has to be paid for by the buyer as is any costs involved in obtaining any pest reports if these are found necessary.
Lenders Mortgage Insurance.
You might be required to take out Lenders Mortgage Insurance (LMI) before you will be offered the home loan. This will depend on a few factors, one being the amount of money being borrowed in comparison to the equity you will hold in the property once the loan is approved. It is usual to require a borrower to take out LMI if you are borrowing over 80 percent of the property price. LMI is taken out to protect the lender, not you, the borrower. It guarantees the lender that any outstanding loan money will be paid should you default for some reason. If for instance the bank found it had to sell the property because of your default on some broken agreement in your mortgage but the sale failed to raise the total amount owing. The LMI would pay the balance owing to the bank.
Municipal rates.
Local government rates are another cost that you will be immediately liable for from settlement forward. Once you become the legal owner of the property you will be responsible for the payment of council and water rates. During settlement it will be worked out how much of the rates you will be liable to pay for the balance of the financial year that the property will be in your name. This amount is expected to be paid during settlement.
Progress payments.
St.George home loans that are designed especially for people building their own homes can be arranged to have the builder paid at the completion of five different stages of construction. These are known as progress payments but before any construction can start you will have to pay two deposits. One deposit for the land to build the home on and the other to the builder to enable him to start construction. As the building takes place the progress payments will be made by St.George home loans as they fall due.
Building insurance.
Finally there is the cost of building insurance. You should make sure that your builder is properly covered by insurance before he starts work on your new home in order to protect both him and yourself against any loss during the construction stage. St.George home loans also require that you have householders insurance in place prior to the final progress payment being handed over to your builder. It is normal for the insurance company to require the home to be finished before this insurance coverage takes effect.
Related posts:
- Additional Costs Incurred When You Buy Property
- Understand the Full Costs of Buying a Property
- Investment Property Costs
- St.George Home Loan Fees
- Buying Oversights: Hidden House Costs
- Stamp Duty Calculation Guide
- Which Loans are right for Building or Renovating
- Costs of Refinancing
- Stamp Duty Guide
- St.George Home Loan rates to rise by the RBA 25 points
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