Purchasing a residential property isn’t just about paying the price that’s been listed. The costs aren’t over once the winning bid has been offered or the contract has been signed. There are many hidden costs all buyers should know. Below is a list of the big three that all buyers should factor in.
Pest and building inspections
Pre-purchase inspections are vital, and failing to do so can be costly. Pre- purchase inspections in residential real estate range from pest and building inspections to strata reports. Pest and building inspections should be conducted by a third-party professional to confirm the structural integrity of the property looking at building elements and commonly, termite activity. Strata reports are different as they report on the activity of the stratum and body corporate relating to the building and pest maintenance. Having a third-party professional complete the report, and a legal professional review and provide advice, will ensure any issues with the building are uncovered. For a list of any potential issues to look out for feel, free to contact one of our property experts.
These reports can cost between $79 through to $699 (approximates only; ensure you complete your own due diligence), which is a low price to pay for due diligence, and can save you from purchasing a property with potentially costly faults.
The Cost of Sound Advice
Engaging a trusted conveyancer or solicitor to review your purchase contract and settle your purchase is a must. While conveyancing and legal rules will vary according to your state, all buyers should engage a conveyancer at the beginning of the purchase to review the terms of the purchase outlined in the contract of sale prepared by the vendors’ solicitor. Not only will failing to do so potentially cost buyers, it also provides the confidence that the property they are buying is what they have signed up for, and that the terms and obligations of the purchase are agreeable and suitable to avoid penalties surrounding the settlement.
Conveyancer and solicitor fees vary from firm to firm. Often, choosing the cheapest conveyancer is not the best option, and consideration should be made to the services they offer. If you are unsure who to engage as your solicitor, you are best to look for a referral from a family or friend who could provide some insight into their own past experiences. If you get stuck, feel free to contact one of our property professionals for a list of legal experts working in your community.
The Cost of Borrowing
Borrowing money costs money. It is an underestimated statement that often catches prospective buyers off guard. Unfortunately, many buyers don’t know the costs of borrowing, how much of a deposit is required and what the banks are willing to lend based on individual circumstances. A simple solution to this is to engage a mortgage broker to decipher your own borrowing capacity and the associated costs. Each case is different depending on income, size of deposit, purchase price, suburb and so on.
To list a few, buyers should be aware of property transfer fees, stamp duty, mortgage registration, mortgage registration fees, loan application or establishment fees and ongoing bank fees. There may be additional potential expenses, such as mortgage insurance. Without a deposit of at least 20%, most lenders will require buyers to pay mortgage insurance. It protects the lender from losing money if you default on the loan, and allows you to purchase a property with a deposit as little as 5%.
If you are unsure of the costs involved, it is best to contact a mortgage specialist. Again, if you are not sure who to contact please speak to one of our property professionals to point you in the right direction.
If you aren’t sure you’re quite yet prepared, call one of our friendly representatives today to guide you through the process and have you ready to buy your dream home or future investment. We’re more than happy to provide a one on one planning session to establish a suitable plan for your next property purchase.