Loan Market

8 It’s time to chat about fees. An investment property has much the same initial costs as a property you live in, but there are a few ongoing costs you need to have on your radar. Initial costs Application fees Processing your loan takes some work, and the banks charge you for it. It varies from bank to bank – and some even waive it – but others charge as much as $800. Stamp duty This is a state government tax on your property. How much you have to put forward depends on which state you live in and the price of your property. Mortgage insurance This is to protect your lender if your loan is deemed high risk - typically when borrowing more than 80% of the purchase price. The bigger the deposit, the smaller the fee. Loan establishment fees Some lenders, not all, will charge an establishment fee to cover the administration costs of setting up your loan. Legal fees There is a fee to legally transfer the ownership of the property. Usually conducted by a solicitor or conveyancer. Building and pest inspection fees It’s definitely a thing. Usually around $300-$600. This inspection ensures your building structure is sound, undamaged by pests, and termite-free! Ongoing costs Insurance You never know what is going to happen, so it’s good to have building and landlord insurance. No one wants red wine stained carpet or tenants who won’t pay rent. Land tax Generally this is paid annually and is levied on the owner of the land. General tax If your total rental income is more than the cost of owning and managing the investment property, then you will find you have money left over and chances are, you will be taxed on this (positive gearing). Council rates & strata fees All council’s differ, however you can't get around this one, so keep this fee in mind when purchasing a property. Similar fees will also apply if your property is part of a shared block to cover the maintenance of the building. Rental management If you have someone managing your property, then you will need to consider the fees they charge for this service. Maintenance Being an owner means you will need to put money towards maintaining the property and ensuring it remains in good condition.