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Buying Tips
Buying a property is not only one of the biggest purchases you are going to make, but in many cases it will be one of the biggest long term investments you will make and therefore it is imperative that you get it right.
Here are a few tips and suggestions when purchasing a property:
- pre-approved finance - There is not much point in looking around for a property if you do not know what a lending institution is prepared to lend you.
- Budget for interest rate fluctuations - Can you afford the repayments if they were 2% higher? Interest rates fluctuate, and many borrowers do not take this into account, therefore forcing a sooner than expected sale.
- Make a list of Needs vs Wants - Do you really need a 3rd bedroom, or would a study be sufficient? Are you prepared to maintain a large garden, or would a courtyard be sufficient? It’s unlikely that you will find a home with everything you want, so make a list of the core necessities that you require.
- Take into account future plans - Would you be getting married? Having kids? Needing more space? Take into account any changes in your future lifestyle and see if your home, and your budget allow for the changes.
- See a financial advisor for investment strategies - Do your circumstances suit an investment property with higher capital growth, or higher rental income? Should your property be positively geared or negatively geared?
- Budget without round figures - Most purchasers have a budget with a round figure. At Auction this could put you under some pressure. For example, perhaps budget for $652,500 instead of $650,000.
Purchasing Costs
Aside from the purchase price, there are a number of other costs associated with buying property.
These include:
- Stamp Duty
- Conveyancing costs
- Mortgage Insurance
- Building Insurance
- Adjustments such as council rates and water rates
A purchaser should allow 5% to 7% of the property value to cover the above costs.
Stamp Duty Calculator
Click here to calculate stamp duty payable on a property purchase.
First home buyers grant and bonuses
First Home Owners Grant (FHOG)
The first home buyers grant was introduced by the Federal Government in July 2000 to help compensate for the effect of the GST. The First Home Owners Grant (FHOG) involves a tax-free grant of $7,000 for first home buyers of established homes.
It was introduced to make home buying more affordable for all Australians and can often be used as part of the deposit on a home, or to help offset costs such as stamp duty on the loan, stamp duty on the purchase price of the property, insurance, mortgage fees, mortgage insurance, and so on.
The grant is administered by the various state and territory governments, and whilst the requirements and criteria vary slightly between states and territories, the basic requirements in order to qualify for the grant are:
- Be a permanent resident or citizen of Australia.
- You must not own, or previously owned a property - if you are married or in a de-facto relationship, this includes property owned in either your name, your partner’s name or with any other person.
- The property is for you to live in on settlement, or within 12 months of purchase.
Amendments and Deadlines
In November 2008 the Federal governemnt introduced a first home buyers bonus to boost the First Home Buyers Grant. This boost was an increase to $14,000 for first home buyers of established homes and $21,000 for first home buyers of new homes.
This Boost will continue until 1st October 2009, whereby the grant will then be amended to $7,000 for eligible first home buyers of new homes and $3,500 for buyers of established homes until 31st December 2009. The bonus will then cease and only the original grant of $7,000 will apply to all eligible first home buyers.
For further information on requirements and criteria, contact the State Revenue Office of Victoria on (03) 9628 6777
First Home Bonus ( Victoria )
In Victoria, if you are eligible for the First Home Buyers Grant, you may also be eligible for the First Home Bonus or a concession on stamp duty payable for your property. The bonus is $3,000 for an established home or $5,000 on a new home and a further $3,000 if the property is in regional Victoria. A purchaser who is eligible, can claim either the bonus, or a concession on stamp duty, but not both.
As this bonus varies depending on your circumstances, contact State Revenue Office of Victoria on (03) 9628 6777 or visit www.sro.vic.gov.au for more information.
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