|
|
Have a look at the price of the property you think you can afford and ask yourself if you have included the hidden costs such as stamp duty, rates, taxes and insurance, that all come with purchasing a property. If you’ve factored in the hidden costs that’s great! If you haven’t, it may be time to re-evaluate your price.
Calculating what you can afford is necessary before you start searching for property. The cost of buying a property is more than just the advertised price tag. There are hidden costs that you should be aware of when you start to work out what you can afford and possibly how much you will need to borrow including:
-
Government charges such as Stamp Duty and GST
-
Legal fees - solicitor and conveyancer fees
-
Property inspection fees such as building and pest inspections
-
Body corporate fees
-
Investment property land tax
-
Costs of moving from your old address to the new
-
Insurance - building and contents
-
Council rates for the property once you move in
-
Maintenance of the property.
You now need to work out how much you need to borrow to buy the property.
If you’re lucky, you may not need to borrow anything. But if you are part of the majority, you will need some financial assistance.
Most lenders will approve a loan ’in principle’. This means that they have worked out what the maximum amount you can borrow is, so you can then use this figure as a guide when searching for homes for sale. Once you make a purchase, the loan is then formally approved. Lenders fall under one of two categories:
- Institutional, which include banks, Credit Unions and Building Societies
- Non- institutional, which include Vendors and solicitors.
Each will have special packages, different methods of payment and levels of interest rates to entice you. Finding the right property usually takes some time, so you can use this period to research and understand what each of the lenders are offering and how to work out who has the right deal for you.
Now that you’ve completed all the necessary inspections of the property, and are thinking about making an offer, it’s time to check that the documentation regarding the sale is above board. The documents to check are the Vendors statement and the Contract of Sale.
The Vendors statement, is a legal requirement which requires a vendor to provide certain mandatory information about the financial, legal and planning details of the property. Both the buyer and the seller must sign the vendors statement before the contract of sale can be signed. Make sure you obtain legal advice before you sign any document and visit your State Government website to confirm the legal documentation required when buying or selling property.
The seller usually gets the Vendor’s statement completed by a solicitor or Conveyancer. Seek your own legal advice to check that all the details are correct. The Vendor’s statement is required by law to be made available to a potential purchaser for examination and advice before the Contract of Sale is signed. Ask for the Vendor’s statement up front and if you are being pressured take legal advice on what your best option is.
The property deposit is paid by the buyer to the seller once they have exchanged contracts at the time of sale. It effectively concludes the sale and then gives the buyer an interest in the property which can be protected by registering a caveat over the title. If you are the buyer, you would make out a cheque for the amount of the deposit and give it to your solicitor. It is usually held by the vendor’s solicitor in a trust account until the settlement date. The trust account is purely a holding deposit for the purchase of the property. Interest on funds placed in trust are paid to the statutory insurance scheme designed to protect people against any trust account defaults.
The seller may ask the buyer to release the deposit money earlier than the settlement date which requires authorisation in the form of a statutory deposit release statement. Your legal representative’s obligations are as follows:
-
To ensure any unacceptable caveats are withdrawn by settlement
-
To ensure all rates and taxes are paid when the property is transferred to you
-
To ensure that the sale contract is in your best interests and that the sale is subject to the satisfactory completion of all necessary conveyance, inspections and finance
-
To fully explain the implications of the Sale Contract
-
To prepare documentation such as the Transfer of Land, Notice of Sale and Requisitions
-
To make thorough inquiries of local council, water and motor authorities and other government bodies to ensure there are no easements over the property
-
To conduct title searches to ensure that the land titles are clean: for example, that they are owned by who they say they are owned by and will carry no debt upon transfer
|
|
