This is a government cost that is usually the biggest expense outside the purchase price of the property. Stamp duty varies between the states and territories. For guidance on the approximate stamp duty cost in your relevant state go to www.stampdutycalculator.com.au
Loan set up costs
This includes establishment fees and will vary pending on the lender and the loan product chosen. It is important to note that you may also require Lenders Mortgage Insurance (LMI) depending on your deposit size.
What is lenders mortgage insurance
LMI is one of the most popular ways to achieve the dream of home ownership sooner for borrowers that do not have a large deposit. Many lending institutions require borrowers to contribute a 20% deposit before they will agree to provide a loan. This is largely to protect against the risk associated with providing the borrower with the loan in the event that they default. By using LMI, lenders are able to pass on this risk to a mortgage insurer, which in turn enables them to offer the same loan amount
but with less of a deposit. LMI should not be mistaken for Mortgage Protection Insurance which covers your mortgage
in the event of death, sickness, unemployment or disability.
LMI protects lenders against a loss should a borrower default ontheirhomeloan. Ifthe security property is required
to be sold as a result of the default, the net proceeds of the sale may not always cover the full balance outstanding on the loan. Should this be the case, the lender is entitled to make an insurance claim to the mortgage insurer for the reimbursement
of any shortfall, calculated in accordance with the terms of the insurance policy. It is a one-off premium and in a lot of cases can be capitalised within the loan.
Conveyancing is the process of which a property’s ownership is transferred from the current owner (the vendor) by the buyer. Either a conveyancer or solicitor will review your Contract of Sale and ensure appropriate checks are conducted on the property with local government agencies.
It is always recommended that prior to purchasing a property, you hire professionals to inspect the property for structural defects, concerns, pest infestations, or anything else that could potentially cause damage to your property.
With the new liabilities that come with owning property, it is important to consider or review your insurance requirements to ensure you are appropriately covered. There are four main types of insurance you should consider:
- Home Insurance
- Contents Insurance
- Life Insurance
- Income Protection
You may need to start your insurance cover prior to settlement.
How auction works
At auctions you will be required to pay a 10% deposit immediately and there is no cooling off period so you need to be very careful. Issues can arise such as if the property values less than the purchase price you will need to provide the difference between the value and the purchase price. If you cannot come up with the extra funds you are at risk of losing your deposit. Below are some useful tips in regards to auctions –
- Ensure you have finance approved and do not bid above your limit.
- Complete the necessary building and pest inspections prior to auction.
- Get your conveyancer to look over the contract prior to auction.
- Take photo ID with you and remember to register to bid.
- Have your deposit ready to pay on the day of the auction.
Moving Check List – After Your New Loan Is Settled
Below is a checklist that may be useful after your new loan has settled:
- Give notice to your real estate agent if you are currently renting.
- Obtain quotes from several removalists to ensure you are getting the best deal.
- Redirect your mail with the post office.
- Have enough appropriate boxes for packing and label them for each room.
- Change your driver’s licence details.
- Notify appropriate companies / people of your new address.
- Disconnect electricity, gas, water and phone at the property you are leaving.
- Connect the electricity, gas, water and phone at your new property.
- Check smoke alarms are working.
What Is The Maximum Percentage You Can Borrow?
There are some construction loans that may allow you to borrow up to 95% of the value of the property plus some funds to cover the cost of Lenders Mortgage Insurance. After your loan is approved what other items do you need to provide prior to commencing construction?
- Signed Contract (fully signed by builder and purchaser)
- Signed Specifications (fully signed by builder and purchaser)
- Building Services Authority (BSA) Insurance (QLD only)
- Builders Public Liability Insurance
- Arrange insurance covering the full replacement value and ensure that your lender is listed as mortgageeArrange insurance covering the full replacement value and ensure that your lender is listed as mortgagee
- Change your driver’s license details.
Know Your Building Contract
Finding a reputable builder is the first thing to do after you’ve made the decision to build. Next, you will need to enter into a building contract with a licensed builder. The contract is a legally binding document. Ensure you read the fine print!
It is your responsibility to go through the terms and conditions with your legal representative. Never sign anything unless you are 100% certain you understand what it means. Ask the question of your builder – do you have all the necessary insurance policies in place? Whilst the lenders
do not need to sight the following documents, it is strongly recommended that you obtain the following documents from your chosen builder:
- Builders License
- Home Warranty Insurance (NSW/QLD) – also known as Builders Warranty Insurance (VIC), Building Indemnity Insurance (SA), Home Indemnity Insurance (WA), Housing Indemnity Insurance (TAS), Building Warranty Insurance (NT)
- Employers Liability and Workers Compensation remember: At the completion of your construction you will need to obtain an Occupation Certificate, also known as an Occupation Permit, from your local council. fIrst Home owners Thankfully there are several government incentives and benefits available to provide a little helping hand. For more information visit www.firsthome.gov.au