What purchase costs to watch out for as Spring brings increase in property sales

Introduction

At long last, spring is in the air. During spring, property purchases tend to increase, so it is important for potential homebuyers to be aware of a variety of factors that can financially impact them. Some of these factors include additional costs associated with the type of loan, the broader long and short-term costs attached to purchasing a new property, the type of property purchased, the purchasing process, and exclusive opportunities available.

Five important factors

• Low deposit home loans and LMI

One type of loan to be aware of when it comes to extra costs, is a low deposit home loan. A low deposit home loan typically requires a deposit of two to five percent of the property value. This allows you to enter the property market sooner than if you had to save up for a traditional deposit of twenty percent. However, keep in mind that if you do decide to go with a low deposit home loan, you will be required to pay Loan Mortgage Insurance, also known as LMI. This is normally a one-off payment calculated based on both the property price and loan amount, and can be a negligible or significant amount depending upon the value of the property and the amount of money borrowed.

• Purchase costs

There are a variety of costs associated with buying a new property that will drive up the price of your new home when it comes time to sign the papers. Not only is there Loan Mortgage Insurance for those who choose a no deposit home loan, but there are often legal costs, a purchase stamp duty, a transfer fee, and a registration fee involved. Purchase stamp duty refers to money that you must pay to the state government, a tax, when you buy a new property. A transfer fee refers to another fee from the government, in this case to put the home under your name and take away the name of the person selling it. A registration fee is yet another government fee, but in this case adds the lender’s mortgage onto your new property’s title. Furthermore, there are a number of long-term costs other than your mortgage repayment required, such as water, electricity, council rates, and for some, strata costs.

• Type of property

It is important to be aware that different types of properties will have a number of disadvantages and advantages. If you buy an apartment, you will have to pay strata fees, and a higher deposit is often required. Apartments also have less space than a traditional freehold house and, unlike land, depreciate in value. However, apartments are often located centrally and close to public transport, meaning that you can save money on car and fuel costs, easily access entertainment areas, and are close to a variety of workplaces. If you plan to build or renovate a house, the costs of builders, time taken for council approval, and rising material prices, are all factors to consider. On the other hand, if you buy an established property, there may be maintenance required.

• The property purchase process

The property purchase process is one that is long and with a variety of stages. From the initial decision to make the leap and start looking for a property, to meeting real estate agents and visiting open homes, before you have even found your dream house you are already spending time and money. Once you have found the property that you plan to purchase, then the next process begins – paperwork, paperwork, and more paperwork. Trying to get a loan, receiving one, and then finally holding the keys to your dream home is no easy feat. Having a mortgage broker who can help guide you through the financing process is crucial.

• Job-choice and specified policy

One way that certain potential homeowners can save time and money is actually based upon their choice of career. Nurses, doctors, lawyers, physios, and accountants are some of the professions that can receive a 10% deposit home loan with no LMI. However, if you are not in one of these professions, don’t give up hope. For more advice about how you can save on your home loan, speak to an accredited mortgage broker like AA Finance Solutions.

Conclusion

In conclusion, purchasing a new property can be a tricky process, and you need to be aware of fees and costs beyond simply the mortgage repayment. From LMI’s to stamp duty, it is important to do your research before committing to a purchase. As the spring days drift by and properties continue to be snatched up, you may feel a little daunted by the idea of stepping foot into the housing market. However, mortgage brokers like AA Finance Solutions are here to help you purchase your dream home as easily as possible. If you have any questions or concerns, please contact the team at AA Finance Solutions for support and advice.