Understanding the hidden costs of buying a home

Show notes

Bishnu Aryal is the Founder and CEO of Finconnex Financial Services, a financial services company focused on helping everyday people achieve their financial goals. Bishnu is passionate about educating and empowering the community financially and has assisted countless first-home buyers by simplifying and streamlining the mortgage application process.

In this episode, Bishnu breaks down some of the unexpected things you need to be prepared for when buying a home. He’ll explain the common hidden costs you’re likely to encounter when buying your first home, as well as how to budget for these costs. Plus, Bishnu shares his top tip for first-home buyers looking to get into the property market.

Transcript

Michael Nasser 0:00
The information contained in this podcast is general in nature and is not to be taken as financial or personal advice.

Michael Nasser 0:06
It does not consider your objectives, financial situation or needs.

Michael Nasser 0:10
You should consider whether this information is suitable for you and your personal circumstances before acting on it.

Michael Nasser 0:17
Hi and welcome to the homerun your guide to buying your first home in Australia.

Michael Nasser 0:21
On the show, I’ll walk you through the home buying process from every angle.

Michael Nasser 0:24
We cover the steps to take the pitfalls to avoid and the answers to all your questions you’ve been dying to ask no matter what stage you’re at, you’ll learn everything you need to know about buying your first home.

Michael Nasser 0:35
I’m your host, Michael Nasser and I’m a mortgage broker at Lendstreet and I really love helping people buy their first home.

Michael Nasser 0:46
Today. I’m joined by Bishnu Aryal, the CEO and founder of Pinex Financial Services, a financial services company focused on helping everyday people to achieve their financial dream.

Michael Nasser 0:56
In this episode, we’ll be talking about some of the things we all need to be prepared for when buying a home.

Michael Nasser 1:02
We’ll hear about some of the common hidden costs.

Michael Nasser 1:04
You’ll come across when buying your first home, we’ll discuss how to budget for these hidden costs.

Michael Nasser 1:09
And Bishnu will share his top tip for first home buyers looking to get into the market.

Michael Nasser 1:14
Let’s get into it.

Michael Nasser 1:18
Hi, Bishnu, and, and thank you for your time and joining us in the podcast today.

Bishnu Aryal 1:21
Thank you, Michael.
I’m excited to be in this.

Michael Nasser 1:24
So, can you tell us a little bit about your professional background? And how did you get to where you are today?

Bishnu Aryal 1:29
I’ve been in this industry since the last six years prior to this.I wanna explain a little bit about my background.
So I came from Nepal in 2007. When I was 18, I completed my higher secondary level back in Nepal and then travel to Australia to pursue my academic career. Coming here from Nepal without any guidance.I was quite young, didn’t know what to do, came to uni to study but didn’t have much idea on what I’m going to do and how I’m going to survive.Yeah.

Bishnu Aryal 2:03
So I had to go through a lot of challenges.

Bishnu Aryal 2:07
But I went through, well after coming to Melbourne, I studied automotive engineering for one year.

Bishnu Aryal 2:13
I was not able to complete the course because the uni fee was really high, the work I was doing was not able to cover my tuition fees.

Bishnu Aryal 2:22
So I had to give up and look for the cheaper courses So while coming from Nepal, I pay for a six month tuition fee.

Bishnu Aryal 2:31
But coming to Australia, I thought I’m going to make some money and then I’ll be able to pay by myself, which didn’t happen.

Bishnu Aryal 2:38
So, and that is why I had to do my engineering and I decided to study from a diploma level so I can afford my fees here.

Bishnu Aryal 2:48
So I started, I did my diploma from a diploma of accounting and all the way to master’s degree.

Bishnu Aryal 2:54
I work with the Victoria University.

Bishnu Aryal 2:56
After completing a bachelor degree, I started an intern with a smaller company as an assistant, an accountant.

Bishnu Aryal 3:03
After finishing my intern, they took me into the job as an assistant accountant.

Bishnu Aryal 3:08
I worked there for around two years.

Bishnu Aryal 3:10
I enjoyed, but since the childhood, I’m a kind of guy who had a bit of entrepreneur mindset.

Bishnu Aryal 3:17
So I was looking to do something on my own but didn’t know exactly what to do, what to start and what would I do?

Bishnu Aryal3:25
Yeah, because I didn’t have anyone here in Australia.

Bishnu Aryal 3:29
So there was a lack of guidance as well.

Bishnu Aryal 3:32
So I was finding my own path, making my own path all the way through.

Bishnu Aryal 3:36
But after working there, I was just like, even before working as an assistant accountant, I always wanted to do something.

Bishnu Aryal 3:44
And so, yeah, basically what I did that time around 2016, I was also looking to buy a home for myself as a first time buyer, I was not able to find some good, good advice and information.

Bishnu Aryal 3:59
So I see that there is a gap and I also saw there were so many people coming from different countries and are residing in Australia where they post for most.

Bishnu Aryal 4:11
The goal is to have their own home.

Bishnu Aryal 4:13
So I decided to get a license in mortgage broking.

Bishnu Aryal 4:18
So I did my certificate for and a diploma of my mortgage broken and decided to be a mortgage broker.

Bishnu Aryal 4:27
It took me a little time while finding the right mentor.

Bishnu Aryal 4:31
Because for the mortgage broking, you need to get a mentor for the first two years.

Bishnu Aryal 4:34
And after two years, you can be be your independent, you can only be an independent mortgage broker.

Bishnu Aryal 4:41
So I was looking quite actively to find a mentor.

Bishnu Aryal 4:44
I finally found a mentor and I did work with this company for over two years.

Bishnu Aryal 4:50
And during that time, I learned a lot, I understand more about market.

Bishnu Aryal 4:55
I understand how to deal with all this all the clients.

Bishnu Aryal 4:59
And I also understand what are the best strategies that for buyers and investors can use while purchasing the property.

Bishnu Aryal 5:08
So during that time, actually COVID hit 2019 and while working from home, I get a bit more confident that now I can work on my own, I can open my own business and then start my own mortgage broking firm because I was getting like just over two years, I have already helped over 200 plus clients.

Bishnu Aryal 5:31
So I had that confidence that time, if I open my own business and I would be able to help more clients, I would be able to hire more brokers under my panel.

Bishnu Aryal 5:39
And then we can reach in many other cities in Australia as well.

Bishnu Aryal 5:43
So that is when we open Finn connect Financial aiming to help more people more first time buyers to get into the market market.

Michael Nasser: 5:54
Finn Connects Financial Services. Can you tell me a bit about the company? Like, do you guys specialize in first home buyers or what’s your sort of client look like.

Bishnu Aryal
when we start, our main aim was to help From buyers and we still do for buyers are our bread and butter.

Bishnu Aryal 6:05
But nowadays, what happened is we passed over the three years, three years from Pinex Financial.

Bishnu Aryal 6:11
A lot of our first home buyers are becoming investors.

Bishnu Aryal 6:15
So this is where we are helping investors as well.

Bishnu Aryal 6:17
But we do have arms where we are keep continuing, helping keep continuing educating our first home buyers.

Michael Nasser 6:24
And you mentioned this education and you’ve been providing a lot of education and content for first home buyers and investors.
Can you expand on this a little bit?

Bishnu Aryal 6:32
The education has always been my priority.
I am from Nepal and I met so many, so many people.

Bishnu Aryal 6:39
They have an aim to have a home when they get permanent residency in Australia, even the young people that really need the education, they need to understand what’s the process, how they can get into the market?

Bishnu Aryal 6:52
The financial literacy is very important, fostering, budgeting, how you can save the money.

Bishnu Aryal 6:58
What are the number one tips for first home buyers to get into the market?

Bishnu Aryal 7:03
These are very simple educations, simple information, but it’s very important and very valuable for the first time home buyers.

Bishnu Aryal 7:11
No, we always give a priority on education.

Bishnu Aryal 7:14
So also we guide them through all the process and then make them aware of what is happening behind the scene as well.

Bishnu Aryal 7:20
What we’re doing on every step.So they understand.

Bishnu Aryal 7:24
So anything happens in the future, they don’t get surprised or shocked.

Michael Nasser 7:28
Why is this something that you’re so passionate about?

Bishnu Aryal 7:30
When I was buying my first home?
I found there was so much gap in there.So I really wanted to fill that gap.I did a masters degree in Australia in a finance.

Bishnu Aryal 7:41
And when I come to buy a home, when I went to the bank, I was not even ready.

Bishnu Aryal 7:46
I didn’t even have financial literacy.

Bishnu Aryal 7:49
To be honest, this is very important.

Bishnu Aryal 7:51
A mortgage broker like us, if we can educate the people about financial literacy and what they need to do, what are the plans, what kind of goals they need to have if they want to live in Australia and want to buy a home every time I help one family.
This give me a good pleasure.You know.

Bishnu Aryal 8:11
So that’s why we believe in giving the information.

Michael Nasser 8:16
Well, today’s episode is all about hidden costs.
Can you start by giving us an overview of these hidden costs that are involved for a home buyer when they’re purchasing their home?
That they probably haven’t thought about thinking that maybe the purchase premise is the only thing that they’ve got to consider.

Bishnu Aryal 8:31
We do have a lot of clients who come to us and say, oh, look, I have a 90,000 deposit.Can we buy a 900,000 home?

Bishnu Aryal 8:38
Putting a 10% deposit where they don’t realize there are other costs associated with buying a home.So yes, there are some cost while buying a home like your stamp duty.

Bishnu Aryal 8:50
The tax is payable to the government.

Bishnu Aryal 8:52
The stamp duty is different in the different states, slightly lower or higher.

Bishnu Aryal 8:57
So for example, if you buy a house in New South Wales for one million, then the stamp duty is 40,000, approximately 40,000.

Bishnu Aryal 9:05
This is a high cost which they need to take into consideration before making this decision here.The second cost you’ll be looking is lender mortgage insurance.So lender mortgage insurance is the insurance.

Bishnu Aryal 9:18
The main charge if you are putting less than 20% deposit while buying property, that’s the second cost.

Bishnu Aryal 9:25
The third cost would be like your solicitor or legal fees here, which is around 1500 to 5000 depending on the so that you are using. There will be another cost based and building cost while buying a property, you will need to get the building inspector to go and do the inspection of your property and get a proper report to find out if there is any defect on the buildings.

Bishnu Aryal 9:48
So there will be a charge of $502,000 depending on what kind of professional you are using. Also, there will be a property evaluation fee.There will be an establishment fee from the bank.
There will be an ongoing application fee.

Bishnu Aryal 10:02
There is an ongoing cost, a council fee, either the council fee or if you buy an apartment, there would be a strata fee which is which will be ongoing. So these are the costs and also while you buying the property mortgage registration fees.

Bishnu Aryal 10:17
So these are the costs of which you need to take into the consideration. So some of the costs, your mortgage broker can help you to reduce this kind of cost.

Bishnu Aryal 10:25
For example, some bank, they don’t charge your property valuation fee. So your broker will put you if you can save the money, they can place you with that bank to save you.

Bishnu Aryal 10:38
The valuation fee, lender a mortgage insurance fee that your broker can play around try to reduce by increasing your deposit.
So higher the deposit lower will be the lender mortgage fee.

Bishnu Aryal 10:50
So your broker can be a play a play a bigger role to reduce this kind of costs here.

Bishnu Aryal 10:55
Also, loan application fee where some banks are offering the loan without the application fee. Yes, some banks can waive life of the loan fees. So these are the things that your broker can play as a role to reduce some of these costs as well.

Bishnu Aryal 11:10
It is always good to have a good mortgage broker on your side so they can help you to guide you all through all this process.

Bishnu Aryal 11:18
Talk about all this cost and see what are the ways or how can they minimize this cost because they, while you’re buying the home you need to deposit. So if they can save you $1000 $500 $1500 it will be a big help for any first time buyers.

Michael Nasser 11:36
And what’s your advice to first home buyers?
Now, sort of having that list of the additional costs there and some big ticket items there and in particular with stamp duty.
What’s your advice to first home buyers on how to budget for these costs?

Bishnu Aryal 11:48
It is very important for the first home buyers to have a financial goal, say a clear plan and understand where you’re going to need. What, so how much money you need for?
What proposed? So going and meeting to the local mortgage broker understanding the cost.

Bishnu Aryal 12:05
If you haven’t made a plan, sit down with the broker and make a plan three months plan, six month plan or even a one year plan.

Bishnu Aryal 12:12
It is very important to have a clear financial goal.

Michael Nasser 12:16
I think understanding what those costs are from the outset.

Bishnu Aryal 12:19
Yes, understanding the cost and how you can reduce this cost.
Also as a first home buyer, there are so many schemes available by the government here.

Bishnu Aryal 12:27
So understanding what you are eligible for and what you are not eligible for. It can help.

Bishnu Aryal 12:32
For example, if you talk about the recent scenario, so you can opt into for an annual tax in New South Wales now.

Bishnu Aryal 12:39
So you can save if you’re buying a one million property, then you don’t need that big 40,000 now to get into that market.

Bishnu Aryal 12:47
So your broker will have a knowledge because they have been dealing with so many clients in and out.

Bishnu Aryal 12:52
So having a good mortgage broker on the side is always always a great thing because the really beauty thing about mortgage brokers is they don’t ask you anything because they get a commission from the bank once your loan is settled.
So it’s free and why not use it?

Bishnu Aryal 13:09
Also with the financial literacy thing, you can go and check into the moneysmart.com.au where you can find depositing tools and how you can save it. You see.

Michael Nasser 13:19
Are there any particular hidden costs that can vary depending on the location of the property?

Bishnu Aryal
depending on the location, stamp duty can vary depending on what state you’re buying.

Bishnu Aryal 13:29
So if you buy in WA, the stamp duty is a little bit higher in Adelaide is a little bit higher too. But, all the costs are, for example, if you’re buying in Bondai, thecons of fee are quite low. I found it.

Bishnu Aryal 13:43
I found it’s a quite lower pest controls.

Bishnu Aryal 13:46
fee can be a lower as well, but that doesn’t vary too much.

Michael Nasser 13:51
So how did the hidden costs impact the overall return on investment for a property?

Bishnu Aryal 13:56
Now, if, if it’s an investment property, some of the costs can be reduced, but these costs are liable when you’re buying the property. So as a first home buyer, the fees are payable.

Bishnu Aryal 14:06
So if it’s an investment property, then some of the costs are tax deductible. You might need to talk to your accountant to understand more about it.

Bishnu Aryal 14:14
So if you can save this cost, if you needed to buy a higher amount property, then it will allow you to go on a higher bracket property. For example, a first buyer scheme for the first time buyer stamp duty scheme, someone with 90,000 deposit, they would not be able to buy a one million property because they would have to pay the 40,000 in tax.

Bishnu Aryal 14:37
And this kind of cost play a major role if you understand.

Michael Nasser 14:42
Yeah, and I think you’ve mentioned, throughout that, a broker can definitely guide you through all of these and can explain if you can avoid or if there is a waiver for any of these types of fees or whether it’s through a government subsidy or through initiatives through the bank, buy a discounts on products or discounts on fees. And I think that the broker can at least guide you through that and be there to support you.
And I imagine you do that a lot with your clients too.

Bishnu Aryal 15:04
Yeah, true.

Michael Nasser 15:05
All right. Some final thoughts.
We always close off our interviews with two questions.

Michael Nasser 15:09
The first one is what would be your number one tip for first home buyers trying to get into the market?

Bishnu Aryal 15:15
Yeah, as I said before, having a clear goal, what do you want to do? What, what do you want to buy?

Bishnu Aryal 15:21
What’s your, priority and having a savings plan and a budgeting tool to track your expenses, income and having a, like at least a savings habits of net 10% of your income.

Bishnu Aryal 15:34
So that’s always a first tip.

Bishnu Aryal 15:36
And then second tip would be, talking to your mortgage broker.

Bishnu Aryal 15:40
Go and even a one year ahead, go and sit down with the mortgage broker and understand what are the steps that you need to be going through to get into the property.

Michael Nasser 15:50
And the second question.

Michael Nasser 15:51
So if you were a first time and you had a million dollars to buy, where would you be buying?

Bishnu Aryal 15:56
It totally depends on the personal circumstances for me, I will look into what is important for me.

Bishnu Aryal 16:03
So if I have a $1 million I want to invest, I’m a first buyer.

Bishnu Aryal16:07
I want to buy a property.

Bishnu Aryal 16:08
I’ll look into many things here.So it’s the demographics.

Bishnu Aryal 16:13
The first thing I will look into is the area.

Bishnu Aryal 16:16
Is it going to grow over the long time?

Bishnu Aryal 16:18
So I will look into the area which is growing.

Bishnu Aryal 16:21
I’ll look into the demographics, what kind of population are living there?

Bishnu Aryal 16:26
I’ll look into the community because at the end of the day, I will need a community, my kids will need community to grow.

Bishnu Aryal 16:33
The third thing I will be looking is government infrastructure.

Bishnu Aryal 16:36
What the government is putting into that area is this area is going to grow in a long term.

Bishnu Aryal 16:43
Government has a plan for this area.

Bishnu Aryal 16:46
So I’ll look into that.

Bishnu Aryal 16:48
Also, I’ll look into this my affordability as well.

Bishnu Aryal 16:51
I can’t just go and put the money for if I’m not capable to live in a certain area because I know my income, I know my, what I can afford, I know what I will enjoy.

Bishnu Aryal 17:04
So we’ll look into whole personal circumstances and make a decision based on that.

Michael Nasser 17:08
Yeah, totally.

Michael Nasser 17:09
And, and I think part of the aim of that question is not necessarily to get a particular suburb or, or what you would buy.

Michael Nasser 17:14
It’s to think about the factors that you consider when you are buying and, and you’ve put them relatively well, very well there in terms of, you know, the types of things that people should be thinking about when it comes to buying a home and, and it’s very much a personal circumstance thing and, and everyone’s very different.

Michael Nasser 17:29
So, so I appreciate your answering that question that brings us to the end of the show.

Michael Nasser 17:33
Thank you so much for your time today.

Michael Nasser 17:35
Thanks for joining us.

Michael Nasser 17:36
Where can our listeners find you if they want to get in touch with you? Awesome.

Bishnu Aryal 17:40
Thank you so much, Michael.

Bishnu Aryal 17:41
I’m really glad to be on this show and thank you for letting me share my personal journey as well as my professional journey.

Bishnu Aryal17:49
If anyone wants to find us, Finn Connects financial people can go into our website www.finnconnects.com.au.

Bishnu Aryal 17:56
We have a Facebook page, Finn Connects and also my name.

Bishnu Aryal 18:00
People can start the Bishnu Aryal on my Facebook page and Facebook

Michael Nasser
And all those will be in the show notes so people can jump on the show notes and click to the links there to get to the relative spots that they’d like to go to get in touch with Bishnu.

Michael Nasser 18:11
Thank you again, Bishnu and it was great talking to you today.
Awesome. Thank you.

Bishnu Aryal 18:15
Have a great day.

Michael Nasser 18:18
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18:24
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