Greetings from Scoutable and welcome to our February Wrap Up.
The market is now in full swing and we're seeing plenty of good stock around. Last week, 3,313 auctions were held across the capital cities. A clearance rate of 66.8% was recorded which is higher than the previous weeks rate of 66.1% (of 1,992 auctions).
For anyone thinking of buying, it's important to remember the various acquisition costs associated with purchasing a property as it's not just the price written on the contract.
Lenders Mortgage Insurance (LMI)
Most lenders will require you to pay LMI if your deposit is less than 20% of the purchase price and it is calculated based on your LVR (loan to value ratio). Basically, the larger your deposit, the less insurance you pay. Of course, if you have 20% or more, this is of no concern unless you are a foreign buyer as the requirements are stricter.
When you take out a home loan, you will generally have to pay a fee to set up that loan. The fee varies between lenders but they are usually quite competitive. In some circumstances they can even waive this fee so make sure you ask!
Legal and conveyancing fees
I would highly recommended using a solicitor or conveyancer to review and prepare all the documents for the contract of sale. Sure, there are some key points you can look over yourself if any of it makes sense to you, but it's imperative to have the documents reviewed professionally before proceeding with a property. The fees can vary based on the ownership structure and the amount of properties you have reviewed.
Stamp Duty costs
Arghhh stamp duty! You've just got to pay it. There are various online calculators to give you an estimate on how much you must allow for this. The percentage you pay depends on the amount you spend and works on a sliding scale. Fortunately for some first home buyers, some states offer exemptions or concessions depending on the purchase price. There are also different rules for off-the-plan purchases and foreign investors.
Inspections: Building and Pest
When purchasing a house, it's advisable to have a building and pest inspection carried out. In the case of buying an apartment, you would purchase a strata/company report which your solicitor or conveyancer will review. While it may seem like an unnecessary cost, it's definitely worth it and will be far cheaper than dealing with a pest problem or say concrete cancer further down the track. Building and pest inspections can cost around $500-$600 and strata reports generally cost no more than $300.
Transfer fees and mortgage registration
Mortgage registration allows the mortgage to be viewed through a simple title search and prevents the mortgage holder from selling their home and not paying back the lender. When you take out a mortgage, the registration process will cost approximately $140 dollars in New South Wales as will the title transfer registration. This fee is to transfer the ownership status of a property and to register that information. Both these fees vary from state to state. Your solicitor or conveyancer will be able to advise on the exact amount.
If the deposit is what you're lacking but you do qualify for a loan, paying LMI is still a good option and can be incorporated into your periodic loan repayments.
If you're looking to buy a home or invest, let us help. We love property and would love to find the perfect one for you.
Till next month,
Kellie Landrey | Principal Buyers Agent
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PROPERTY OF THE MONTH
10/2 MCDONALD STREET POTTS POINT
Recently sold at auction for $655,000 this studio apartment is a great first home or investor buy. While it's only 39sqm, it's clever layout and 1930's charm give it a sense of space with potential to add value.
Positioned in the "Paris end" of Potts Point, it's located on a wide tree lined street, within walking distance to restaurant and retail facilities of Potts Point and Darlinghurst, St Vincent's Hospital, harbour parks, Kings Cross Station and the CBD.
Properties like this provide a great opportunity to enter the Sydney market due to their enviable location and the high rental demand ensures they are hardly ever vacant.
It's important to note than some banks require a minimum internal space of 40-50sqm as part of their lending criteria so it's worth shopping around for the right loan if you're looking into purchasing a small property.
If you'd like to know more about this property or any others, please get in touch.