Tips to consider before purchasing property
When intending to purchase property, the first thing to consider is what your budget is and what you can afford to repay. You must remember that you’re not only subjected to the purchase price, but many other necessary costs are incurred when buying, such as
- Stamp Duty;
- Interest on your Loan;
- Legal and Conveyancing Fees;
- Building and Pest Inspections (Optional); and
- Owners Corporation (If applicable).
It is always a good idea to inspect the property you intend on purchasing and check if it really is suitable to your standards and whether the asking price is reasonable.
Build and Pest Inspections
Build and Pest inspections are optional, however, it’s always better to be safe then sorry. This entails of a visual inspection of the entire property to identify any major structural faults, minor defects, maintenance issues to safety hazards and any damage to the timber from pests.
A pre-settlement inspection is recommended in the weeks close to settlement, making sure all conditions have been met and the property is in the same state as when you signed the contract of sale. It is important as it allows you to raise these issues with your representative and attempt to find a solution before settlement.
Financing your purchase is the real concern, because without the finance there is no property. Most rely on lenders such as banks and/or brokers in order to put up the finance for the property they intend on purchasing.
In terms of the finance aspect it is important that you cover all basis and you can repay the amount borrowed over a specified amount of time with a favorable interest rate, whether it be fixed or variable.
Finance Pre-Approval makes life a lot easier for potential purchasers as they are aware of their budget for their purchase. Pre-approval requires you to prove to the bank you’ll be able to regularly make mortgage repayments and won’t be in default by showing them financials such as credit ratings, savings, income and assets.
The bank may require you to get a Guarantor for the property, which is someone willing to put up their assets and/or liabilities as a commitment and evidence that you will repay the mortgage, if not the guarantor is then in default and may lose the asset/ liability they’ve put up on your behalf.
Taxes and other Implications:
Whether you plan on living in the property or purchasing it as an investment can have implications on your income and land tax. Therefore, it is best to get some advice of your tax obligations also prior to purchasing.
Purchasing property is a worthy yet risky investment. Therefore, seeking relevant advice and information is prudent as it allows you to purchase exactly what you are after, is within your budget to repay and that there are no surprises in the future such as tax obligations you weren’t informed of or even structural damage to the property. Acquiring the relevant knowledge for purchases ensures you will be one happy and satisfied property owner.
Please note that this is a summarized brief list of important requirements in a property purchase and it tends include additional processes. If you need assist in your conveyancing purchase or any tax advice, please feel free to contact us on (03) 9942 7790 or alternatively, email Nick Karolidis our Principal Lawyer at email@example.com .