This article was originally published on the Consumer Affair Victoria website. You can go to the original post here.
If you're planning to purchase property there are some essential fundamentals you need to consider as a top priority.
Know what you want
Make a list of:
your preferred areas and suburbs
essential features
non-essential features - this will help you make a choice if there are multiple properties that include your essential features.
Knowing what you want will help you avoid buying a property that does not meet your needs.
Budget before you buy
Carefully assess your financial situation and desired standard of living when deciding how much you can afford to borrow and repay. A financial adviser may help you with this. For more information and help finding one, visit Choosing a financial adviser - MoneySmart.
Take into account:
your circumstances and financial commitments
any future plans; for example, starting a family could mean a drop in income
other possible changes, such as interest rate rises or unemployment.
Costs
Consider the costs of buying a property, including:
legal and conveyancing fees
financial adviser fees and commissions
loan establishment fees
government charges, such as:
land transfer duty (formerly stamp duty) - visit Land transfer duty - State Revenue Office
goods and services tax (GST) - visit GST and property - Australian Taxation Office.
building and pest inspection fees
moving costs.
Also consider ongoing costs of property ownership, including:
regular repayments for the length of the loan - usually 30 years
insurance (building and contents) - if applicable
household bills
council rates
land tax (if applicable) - visit Land tax - State Revenue Office.
Concessions
Consider any concessions you may be eligible for, such as:
the first home owner grant – this is a one-off payment to eligible first home owners buying or building a new home. Some lenders will help you arrange the grant application. For more information, visit First home owner - State Revenue Office
land transfer duty reduction.
Finance
Before getting a home loan (mortgage):
work out the amount you need and feel comfortable borrowing – remember, you do not have to borrow the full amount offered by the lender
use loan simulators to give you a rough idea of how long it will take to pay off your home loan (and what the repayments would be) based on the loan amount, interest rates, frequency of repayments and preferred length of the loan. Try the mortgage calculator on MoneySmart
ask your lender about any fees and charges
study the fine print on contracts, brochures and printed material
be wary of financial advice or referrals from mortgage brokers.
It is illegal for estate agents to give financial advice. For budget tools and information about home loans and mortgages, visit Buying a home - MoneySmart.
Know your cooling-off rights
A cooling-off period of three business days applies to private sales of residential and small rural property sales.
The cooling-off period gives you time to consider the offer and change your mind. It begins from the date you sign the contract, not from the date the seller signs it.
If you decide you no longer want to buy the property, you can cool-off by giving written notice to the seller or the seller’s agent. You will be entitled to a full refund of any money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater.
No cooling-off period
The cooling-off period does not apply if you:
bought the property at an auction or within three clear business days before or after an auction
the property is mainly used for industrial or commercial purposes
the property is more than 20 hectares and mainly used for farming
you previously signed a contract for the same property with the same terms
the buyer is an estate agent or corporate body.
Get informed about the property market
Learn as much as possible about every aspect of the property buying and selling process; shop around and compare products and services offered by:
estate agents
legal practitioners
conveyancers
financial advisers
lenders.
For more information about expert advice that may assist you when purchasing property, view Seek expert advice on property.
Research the market value of property in your preferred areas by:
searching real estate websites for recent sales dates, suburb median prices and demographic data and trends
attending auctions – this will give you an idea of the level of interest and demand for properties in that suburb. A higher number of people at an auction is likely to mean multiple bidders, which can often push the sale price well over what was expected
speaking with agents – they will be able to give you advice about the suburb and similar properties their agency has for sale
checking auction results online or in newspapers.
Underquoting
Make sure you understand the laws about underquoting in Victoria. For more information, view Understanding property prices.
Do not rush into buying property
Never rush or be pressured into making hasty decisions.
Make sure you are committing to the right property for you.
You will feel more confident about your investment if you make an informed decision.
Read property and loan contracts before you sign
You may come across different types of contracts, including loan contracts and contracts of sale.
Make sure you read and fully understand all terms, conditions and fine print in the document before you sign.
Many terms and conditions in contracts and agreements with sellers, agents, lenders, legal practitioners and conveyancers are negotiable.
Ask that any terms or conditions you verbally agree to are put into writing in the contract or agreement, so you know exactly what you are committing to before you sign.
If something is unclear, ask for an explanation. If you are still uncertain, seek independent advice before signing. You should keep a copy of all documents you have signed as a record.
Consider sustainable property features
There is a 6-star energy efficiency environmental standard for all new homes, renovations, additions and relocations of existing homes.
New homes must have a:
6-star energy rating for the building fabric, including the roof, walls, floor and windows
6-star energy rating for fixed lighting, but not plug-in appliances
rainwater tank for toilet-flushing or a solar hot water system.
Renovations, additions and relocations must have a 6-star energy rating for the building fabric, but do not require a rainwater tank or a solar hot water system. If a renovation or addition is more than half the size of the existing house, the whole building needs to be upgraded to a 6-star standard.
New apartment buildings must have an average of 6-star energy rating for the whole building and a minimum of 5-star energy rating for individual apartments.
When buying an established home, consider the benefits of sustainable features that can reduce living costs, reduce greenhouse gas emissions and add to the value of a property.
For information about the energy efficiency features to look for in a home, visit the 6 Star Standard - Victorian Building Authority.
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