There's no doubt that buying real estate in Surfers Paradise is a huge investment of time and money. In fact, property is one of the biggest assets that most people are likely to buy in their lifetime, so it's important to have all your bases covered before entering the market.
However, there's more to purchasing real estate than simply the upfront costs of the home. When saving up a deposit and beginning the process of applying for a home loan, it's easy to be sideswiped by some of these hidden costs. Being knowledgeable and prepared can help to mitigate some of the surprises that could jump you on the home stretch, so here are some of the common costs that may pop up during your foray into real estate.
The most common expense that will come up during your real estate transactions is stamp duty. At a basic level, stamp duty is a tax charged on a number of different transactions across the globe – including the exchanging of property from one person to another.
You're legally obligated to pay stamp duty within 30 days of moving into your property, so it pays to begin preparing for this well in advance. Depending on the state you live in, there may be different things to consider with stamp duty payments, so it pays to investigate these. For example, first home buyers in Victoria are eligible for massive reductions in stamp duty costs if certain criteria are fulfilled, which could be something worth looking into across the region.
When you apply for your mortgage, you'll be expected to pay a small, one-off fee to the bank as a charge for establishing your home loan. However, sometimes the banks will wave this expense as a part of their home loan deals, so it could be worth looking around and finding the right financial option for you and your real estate needs.
Saving up a home loan deposit can be a long process, especially if you're a first time buyer juggling rent, expenses and building up your savings at the same time. The traditionally accepted minimum deposit amount is 20 per cent of a property's value, which means if the home you're considering is valued at $600,000 then your deposit should realistically be $120,000.
However, some lenders may be willing to reduce the deposit amount required for your purchase and instead front a larger amount towards your property goals. Naturally, this comes with added risk on their behalf, so chances are you'll be charged lenders mortgage insurance (LMI).
LMI is a one-off cost paid alongside your loan in order to protect them in the long term in case you're unable to make your mortgage repayments. If you don't want to pay LMI, it's always worth waiting a bit and saving up the required 20 per cent deposit.
As mentioned before, buying real estate is a huge milestone in most people's lives. Therefore, you'll want to ensure you take all the necessary precautions to protect yourself from any potential problems that could arise in the future.
It's good practice to obtain a professional pest and building inspection of a property before committing to a sale. This will highlight any hidden problems in the home that – if let untreated – could cause expensive issues later on down the track.
You'll be provided with a report afterwards detailing any potential problems you should be aware of, which can then be presented to the vendor and a deal can be arranged. These are just some of the hidden costs to consider before moving into your local real estate market.