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Once you have an idea of what you can afford you should start looking at prices and property values. In other words research the market. Outer suburbs and rural homes are usually cheaper because of travelling costs and distance from public services.
The real estate market is driven by supply and demand. Buyers are attracted by desirable features, availability of property for sale and the price range. There may be too many or not enough properties on the market. This creates cycles of either a 'buyers' or 'sellers market'. A market cycle will effect the rise and fall in housing prices.
Advertised prices may be higher than the market price. Similar houses in the area may have sold recently so check with the selling agents about prices. Attend any auctions in the area to note the price a property is selling for. More information about valuation and property prices can be obtained from the Land Information System Tasmania. Independent property valuers are available to assess real estate properties for a fee.
If renovation needs to be done this increases the real cost of the property to you. Builders can give you an estimate of the likely cost of renovations.
If the property is old it may pay to get a building consultant's report on the structural condition of the property. This will reveal the likely costs of renovations or repairs and will be useful when negotiating with the seller.
Advertised prices may be higher than what similar houses in the area are selling for. You should add the cost of renovation to the price when placing a value on the property.
Information such as median house values are available from organisations such as the Real Estate Institute of Tasmania and the Australian Bureau of Statistics. The figures are a good guideline but are not always current.
Most home purchasers need to borrow when buying a house. It is important therefore to recognise that regular income will be needed to pay for this loan. The average lender is looking for a low risk and a long term arrangement with a home buyer.
Lenders want not just a suitable income but a savings history. This is why there is usually a deposit required from the borrower. The requirement may vary but a deposit of around 20% of the purchase price is a general rule, ( ie $20,000 deposit for $ 100,000 loan ). The same principles would apply if the house is being purchased for investment reasons rather than a family home. You may use another asset as the deposit instead of just savings.
There are also other costs with buying a home, such as stamp duty, conveyancing fees, council certificates and inspection reports. You may be entitled to have a stamp duty loan which will allow you to pay stamp duty by monthly instalments, interest free. This is only available to first home buyers and where properties are below a certain value.
If you are unsure about whether you would qualify for a loan you should seek advice from lenders such as banks and credit unions. They will give you an idea of the conditions you will be asked to meet when applying for a loan.
If you are unlikely to meet the lending requirements you may seek financial advice on how to improve your position. Financial advisors may suggest better use of your income and can draw up a savings plan. A plan demonstrating your financial savings ability can be helpful when negotiating with a lender.
Private fees
Professionals such as agents, brokers or valuers will charge fees for their services. You should make sure you know the cost of the service in advance. These costs should be budgeted for as part of the overall cost of purchase.
It is important to recognise that some fees such as agents and solicitors fees are negotiable and you should shop around for a quote. Other fees, such as government charges, are non negotiable.
Estate agents and solicitors work on fees based on a recommended scale from their industry bodies. These recommended levels are negotiable and not set. If you want to get an idea of these fees contact the Real Estate Institute of Tasmania or the Law Society.
Government fees and charges
Government fees are mandatory and set by local councils and state and federal government agencies. These fees will cover taxes, search fees, registration fees and stamp duty on the transfer of property and on the mortgage.
The State Treasury website contains a stamp duty calculator. You can ask for details on council fees from the local council.
Cost of Moving
A cost that is sometimes not considered is the expense of moving into the new house. You should have a schedule for moving based on the settlement date for your purchase. It is recommended you have a prepared inventory of goods and chattels you intend to move. If the inventory includes large or difficult items you should engage removalists to assist with the move. This is also recommended if the new property is difficult to access.
Government does not license removalists however the Australian Furniture Removers Association requires accreditation. They administer a code of conduct and can advise consumers on the hire of a removalist.
Cost of setting up house
To make a house a home you will need a variety of goods. Whitegoods may not be part of the sale, you may need a lawn mower or garden tools, a clothes line and any number of other goods which have not been included in the sale.
It is important to know which chattels are included in the sale, and to budget for some immediate cost such as replacing an old stove. You may not have considered the boundary fencing of the property which could become an immediate concern if you have children or animals to contain.
The security of the property may require by adding locks or security systems which may be installed but not connected. These types of items may be missed in any general inspection.
It is important to consider the cost of connection or reconnection of services such as electricity or gas bottles and telephones.
Repaying your loan is a regular expense on your income. Try to pay as much as you can and divert any spare cash to the loan.
However remember to budget for local council rates and service charges. In some municipalities water may be charged separately. If the property is not your principal residence you may also have to pay annual land tax. The property and contents should also be insured and you should allow for maintenance and repairs. You should set some money aside to cover these costs.
The wider your search for qualified advice the more informed and aware you will become about your commitments. This will allow you to determine how much you can afford to borrow and what your repayments will be. There are loan calculators available on the internet which give payment indications based on current rates. This will give you an indication but you should also obtain quotes from lenders. You may wish to seek the advice of a finance or mortgage broker who will research what loan options are available.
When considering a loan offer you should ask for a written loan repayment schedule from your financial organisation. Be sure to ask questions about your obligations to the lender and any fees payable. This will help you get an idea of whether you can afford the repayments and other costs.
