Embarking Into Real Estate – The Basic Fees and Finances

Buying real estate in Australia, whether for living or investment purposes, is one of the biggest financial commitments most Australians will take on in their lives. With many repayment periods lasting 15 – 25 years, that’s a long time to be making repayments.

Before you embark on your property endeavours, taking care of your financial situation is an important factor. Understanding your obligations and the various fees and charges involved with buying property will help to put you in good standing to take on the market with positivity and ease.

One of the first things you’ll want to take care of is figuring out your borrowing capacity. This is the amount of money you’re able to borrow from a lender towards your household and is hugely influential in the entire real estate process.

Your borrowing capacity is influenced by a number of factors, not just your savings. Income, expenses and your credit rating all play a role in determining how much you’re eligible to borrow towards your property goals.

However, it is important to remember that the criteria for borrowing vary between lenders – so it’s best to have a chat with them yourself about your current financial situation.
Remember, lenders are looking to ensure there is a reliable chance of them getting their repayments on time and in full.

Furthermore, many first home buyers are confused about how much their initial home loan deposit should be.

The value of the property is factored in along with whether or not the buyer is also going to be an occupant, or if the property is being bought for investment purposes.

The usual minimum for those who intend to occupy the residence is around five per cent of the property’s value. This can grow to around ten per cent if the property is being purchased as an investment.

Finally, there are a number of fees and charges which can creep up on the unsuspecting buyer during their real estate transaction.

For example, stamp duty is a tax which applies to acquisitions – such as the transfer of real estate. Historically, stamp duty referred to a literal stamp which, when put onto a document, illustrated the tax had been paid and the document came into legal effect.

Nowadays the physical stamp may be gone, but the legally binding fee isn’t. The fee varies from state to state, so getting in contact with the relevant Office of State Revenue will help to answer any questions you may have.