Buying a Property, how much can you Borrow?
A mortgage broker can help you work out how much you can borrow and what the repayments will be, and may go through your budget with you to check that repayments will be manageable.
State and territory governments impose taxes on a range of paper and electronic transactions. These taxes are variable across state and territories, and may be called stamp duty, transfer duty or general duty. They can add significantly to the cost of buying real estate. If you buy a $300,000 home in N.S.W., for example, you will pay $8990 stamp duty on the purchase (see ?Government help for first home buyers). Additional stamp duty will be charged on loan agreements.
When calculating how much you can borrow, be sure to include all your loan costs, conveyancing fees, and stamp duty or transaction taxes.
Your lender will probably require you to obtain a professional valuation of the property. Some lenders arrange that for you at no cost. Others charge, or require you to pay a private valuer approved by them.
Other items you need to budget for:
?Rates and taxes on the property, and sometimes body corporate fees - These costs are 'adjusted' on settlement, and add to the total you must hand over when you complete your purchase, so make sure you understand what costs you will incur.
?Property insurance - it is essential for your peace of mind, and most lenders will demand proof that the property is adequately insured and may insist that they are listed on the insurance policy as the mortgagor.
?Costs of moving and those unavoidable incidentals. You will invariably find a dozen little things that need fixing or improvement to make your home comfortable.
You can also explore things on your own using online calculators which tell you how much you can borrow, and let you compare total interest and repayments over different terms and at different interest rates. Visit www.wealthadviser.com .au where you will find a range of calculators to help you.
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