Fees when refinancing
Mortgage Stamp Duty, Stamp Duty. And Fees That Apply To The Purchase of Property
Mortgage Stamp Duty and Stamp Duty
We'll get onto mortgage stamp duty in a minute but let's get the big one out of the way first.
All transfers of land are subject to duty based on the value of land including its improvement. The percentage applied and subsequent total cost is set by the relavent State Government and become a revenue tax on property for that State Governement.
Stamp duty savings can be made under certain circumstances when buying property.
While there are varyiances and some concessions applied to the Stamp Duty that applies to the transfer of land, the usual practise is that the purchaser will be responsible for this liability and the Lands Title registration fees upon presentation of the documentation to each States equivalent of the Revenue collection department.
Want to know more about the cost of stamp duty around Australia?
Now that we have the big one out of the way, well the effect on your hip pocket anyway, we'll take a look at:
Mortgage Stamp Duty
A mortgage is subject to (funnily enough) 'Mortgage Stamp Duty' and the applicable rate applied is dependant on the type of mortgage that you hold. There are two different types of mortgages:
Non Home MortgagesWhen you apply for a home mortgage, a home means any residential premises and a mortgage is a 'Home Morgage' if:
*You are a natural person and *The whole amount of your loan has been, is being, or is to be used for the any of the following purposes:
*Purchasing land that intend to be your principal place of residence *Making additions or improvements to your principal place of residence *Repaying a loan for any or all of the above purposes*No amount may be used for other purposes such as car purchase, business costs or holiday as it will then become a Non-Home *Mortgage and not qualify for duty exemption.
Mortgages taken out from July 1 2005 for the purposes of home acquisition of impovement are exempt from mortgage stamp duty
Mixed Purpose Loan
Any mortgage that is used in part for purposes other than a Home Mortgage is liable to mortgage stamp duty as if it secured only so much of the loan as is to be applied for the other purposes. In essence this means that you are exept from duty on your Home Mortgage ONLY.
Mortgages taken out from July 1 2005 for the purposes of refinancing a loan whereby duty has already been paid are exempt from mortgage stamp duty provided:
*You are refinancing your own loan
*Some of the mortgaged property is common to both mortgages.
*The earlier mortgage is disharge before or as soon as practicable after your first payment made by your new refinanced mortgage.
Establishment or Application Fees
While many lenders waive some or all of these fees in a competative market, a typical amount charged ranges between $500 to $600
Often included in a lenders Establishment or application fees, such fee or any subsequent valuation fee would approximate $300.
Registration Fee - Transfer of Land Document
This fee can vary substancially and is dependant on a sliding value scale and any exemption of Stamp Duty.
In South Australia, where the value is assessed under the Stamp Duties Act and is,
not more than $5000 the fee is $104 not more than 20,000 the fee is $116 not more than $40,000 the fee is $130 More than $40,000 the
fee is $186 plus $57.50 for every $10,000 (or part there of) above $50,000Approximate fee for Transfers that are Duty exempt is $104
The transfer land document in South Australia is lodged with the Land Services Group http://www.landservice.sa.gov.au
Mortgage Registration Costs
This fee covers the registstration of a mortgage on the title. While this fee is approximately $120, your lender will need to do to a title search.
Done at the time of your mortgage registration, your title search attracts an additional fee of approximately $20.
Solicitor/Settlement agency Fees
Generally speaking a Settlement agency is more economical, however should you require the services of Legal council during the settlement of your property a Solicitor may be of first choice for you. The fees for this service range between $900 and $2500
Council rates and Water rates (Adjustments)
The previous owner of the property that you buy will apply to the council for council and water rates refund from the day of settlement and you, as the new owner must then pay the council rates from that day.
The costs for these rates very much depends on the time of your purchase and payment cycle of these rates. You may also be eligable to a rate concession as a pensioner or similar. An example of this calculation for a property settlement in March where yearly rates of $1800 have been paid up until August would be thus:
$1,800 divided by 12 months x 6 months = $900
Home and Contents Insurance
Building insurance will be required to be taken out by your lender and this fee will be shown in your mortgage costs. Yor home and contents insurance is an independant expense and cover that is highly recommended that you obtain. Obviously this depends on the amount of cover and type of items that you want to cover however a guide line fee for this insurance would be $500.
Lender's Mortgage Insurance
Lender's mortgage insurance normally becomes a necessity when Loan To Value (LVR) ratios exceed 80%. As the name may suggest it protects the lender and not you the borrower. It is insurance that your lender will require you to pay the premium for however as protection against the possibility of you defaulting on your mortgage payments requiring your lender to conduct a mortgagee sale to recover costs. The fee which ranges between 1.5% to 2.5% of loan can normally be included in the loan amount.
Progress Inspection Fees for construction loans
If your home is being built and financed via a construction loan your dwelling will require ongoing construction inspections from your lender. These fees are approximately $120 per inspection.
Discharge of Mortgage Fee
When you request a loan to be discharged, a fee of approximately $120 is payable on the day that your loan is repaid in full. This is to register the discharge of the Mortgage on the Title. Your loan provider will also provide a discharge fee of up to $400 plus any break costs. The total will have to be clarified with your lender at the time you want to discharge your mortgage.
It is always prudent to plan for sundry expenses that may occur unexpectantly like extra postage, photo copying, search and the like. A historic safety margin would suggest that you allow $500 for this purpose.
You can obtain an example costing Worksheet to work your own figures for Property purchase or a costing work sheet for the refinancing of a mortgage to gain a more complete picture of the total fees involved.
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