Yahoo Finance Young Aussie home buyer fumes over ‘hidden fees’ worth thousands
Kirstie was shocked when she found out about the fees that weren't disclosed to her.
A Queensland woman has described buying her first home as like a “slap in the face” thanks to all the unexpected fees she wasn’t informed about during the process.
Kirstie McConnell originally received advice from a mortgage broker that she would only need $27,000 for a 5 per cent deposit on a one-bedroom apartment. The flat was $365,000 and, with $45,000 in savings, she thought she’d have a decent amount of leftover cash.
However, the 26-year-old was then told her deposit would need to be more than 10 per cent - at $38,000 - because her HECS debt hadn’t been factored into the original home loan application.
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When she went to sign the contract, the broker said the lender wasn’t going to be able to give McConnell the loan unless she had a $49,000 deposit, which was thousands more than she had saved.
Determined to make it work, McConnell tried to rustle up the extra $4,000. She had already paid $35,000 by this point because the contract had become unconditional, meaning she had $14,000 left to pay.
But the final required amount jumped from $14,000 to $18,000 because of hidden charges like inspections, transfer fees and contingency fees. That number also didn’t take into account the fees attached to moving out of her apartment and additional council fees after she moved into her new home.
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“Since my deposit amount had ended up so much higher than I'd initially expected - based on lowball estimates from my broker - I was very nervous about additional fees and making sure I had enough money in my account to cover everything,” McConnell told Yahoo Finance.
“Because of this, I directly and explicitly asked my broker multiple times if there were any other fees that I would need to factor in as I moved forward through the process.
“He assured me multiple times that there were not. You can imagine my surprise when my final bill from my solicitor to complete the transfer was thousands of dollars more than I was expecting.”
The costs that were and were not disclosed
McConnell knew she wouldn’t have to pay stamp duty or lenders mortgage insurance (LMI) because she was buying the unit through the federal government’s First Home Buyer Guarantee scheme. She had to pay a few hundred dollars for a building and pest inspection, around $1,500 in solicitor fees, and then roughly $300 on checking the seller had paid all their council rates and other costs.
The Queenslander found out those checks ended up being $600. She said another charge that wasn’t mentioned to her during the whole process was a $1,700 transfer fee, as well as a $500 “contingency surplus” in case the broker’s calculations weren’t correct.
"I feel I just got taken for a ride by the professionals that were meant to be on my side,” McConnell told Yahoo Finance.
“I would just recommend getting multiple opinions, from brokers as well as directly from banks, and make sure you account an extra $5,000 or so for fees, no matter what anyone tells you, just to be safe.
“It's already so difficult for young people to get into the property market - soaring house prices, rent prices, and general cost-of-living prices … HECS debt. To not be able to trust those around you is just another slap in the face.”
She said there were also strata fees and other charges attached to taking over the property, but it wasn’t clear to her if that was on top of the $18,000 she had to pay or if that was included. McConnell said her solicitor told her the broker should have made very clear all the charges and fees that were attached to the sale - especially the transfer fee, which didn’t come up at all during the process.
Get everything in writing
Aussie Home Loans mortgage broker Rhienne Horvath told Yahoo Finance there was a lot to digest when getting a loan.
Horvath said that was why it was important to make sure everything was written out and you had all the information in front of you if you needed to look over it again.
It also saves you from issues down the line if you’re hit with additional fees that weren’t mentioned at the start.
“It's just very, very, very disappointing that [the fee disclosure] was missed, and would have been very disappointing for her as well,” she told Yahoo Finance. “Because things like this financially ruin people. It's not something to be taken lightly.
“You need to communicate. Part of being a successful and a good broker is just good communication. Even if it's not good news, you’ve still got to communicate.
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