Buying property is exciting but there is one factor that keeps all those dreams in check - money.
You probably have a rough idea of what you can afford. But have you considered the hidden costs such as stamp duty, rates, taxes and insurance?
In some cases you may need to compromise on what you 'want' and what you 'need' when looking at property.
Assessing your finances
Calculating what you can and can't afford may be the least exciting part of buying real estate. But it's a necessary evil that we all have to consider.
Do you know about the hidden costs when you buy 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. Some of these charges include:
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Legal fees - solicitor and conveyancer fees
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Government charges such as Stamp Duty and GST
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Property inspections fees such as building and pest inspections
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Body corporate fees
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Investment property land tax
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Costs of moving from your old address
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Insurance (building and contents)
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Council rates
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Maintenance
This list is not exhaustive, but it will give you a start of what things may come up when buying property.
BuyMyplace has affiliations with some of Australia’s largest and most respected financial planning organisations to help if needed.
The three golden rules on buying
1. Don’t buy before you sell (or if you do, get a long settlement)
This may sound obvious but it is generally wise not to enter into one financial commitment until you understand what your exact financial position is. In the case of property, if you are looking to purchase and rely on some funds from the sale of your current property, you won’t know exactly how much equity you have for your new purchase until you sell your current place.
If you do find your perfect property, try to negotiate as long a settlement as possible so you can avoid being caught between having to settle on one property and having to hold another pending sale or settlement.
2. Buy what you need not what you want
Of course you want a property that suits your lifestyle. However have you thought about what you need, rather than what you want? You may want a place with two bathrooms and a double garage in your favourite area, but is that what you need right now? Keep in mind that this most probably won't be the last time you buy property, so the handy extras you want, may not necessarily be what you need at this time. Using this logic, you can save yourself thousands of dollars and many late nights worrying about what you can afford, when searching for real estate for sale.
3. Don’t exceed your financial limits
Put simply, think of the future when you are looking at property for sale. Don't risk more than you can afford. If you are stretching the limits with your current income, have you asked yourself the question 'what's the worst that can happen?' What if interest rates rise? What if you decide to have kids? What if you lose one income? Sure, there are a lot of what ifs, but it is better to think of the worst scenarios now rather than living a real estate nightmare in the future.
Creating your shortlist