NEWSLETTER Buying Property – How much does it really cost?
Have you ever heard the term ‘Hidden Costs’ and wondered what that meant? When this question is asked in relation to purchasing property it can mean quite a lot, many thousands of dollars in fact. It is important when seeking finance (to purchase a house) that you know just how much money you need to apply for, and also if it is within your budget capabilities to meet the repayments and up front costs. Berg Financial Services will be able to provide guidance to the homebuyer and answer questions regarding the ‘Hidden Costs’ involved. The price of property as advertised in the Real Estate window is usually only the starting figure that you need to build on. Berg Financial Services can calculate almost to the last dollar what it will cost you to purchase a property that you have in mind, or help you to determine your budget boundaries. Some of the ‘Hidden Costs’ that may be incurred when purchasing property are – Contract Stamp Duty Contract Duty (sometimes referred to as Transfer Duty) is calculated on the purchase price and usually collected by the Conveyancer / Solicitor. Contract Stamp Duty is a State Government tax payable by the purchaser of Real Estate. In NSW this duty is payable to the office of State Revenue on or before settlement. (NSW Contract Duty on property purchased for $150,000- is $3,744-) * State Government taxes differ in cost and calculation in different States and Territories across Australia. If purchase property is in a state or territory other than NSW, Stamp Duty calculations applicable to that State will apply. Mortgage Stamp Duty Mortgage Stamp Duty is calculated on the Loan amount and is usually collected by the Finance Provider / Bank. In NSW Mortgage Stamp Duty is calculated at $5.00 for the first $16,000- and then $4.00 for every $1,000- thereafter. Mortgage Stamp Duty is a State Government tax and is payable to the Office of State Revenue at, or shortly after settlement. * State Government taxes differ in cost and calculation in different States and Territories across Australia. If purchase property is in a State or Territory other than NSW, Stamp Duty calculations applicable to that State will apply.
* Government incentives may apply which exempt First Home Buyers from paying full amounts of Stamp Duty. Ask Berg Financial Services for full details – conditions apply. Finance Costs
Depending on what sort of loan you secure, how your borrowings are structured, and who your Finance Provider is this cost can vary immensely. When calculating how much a Home Loan will cost, you need to consider such charges as: Establishment and / or Application Fees, Broker Loan Management Fees and Valuations. Don’t forget Registration of Documents. Registration of new Mortgage, Discharge of old Mortgage, and registration of Transfer need to take place. In NSW this costs $60.00 per document and is a State Government tax. State Government taxes differ in different States and Territories across Australia. If the property being purchased is in a State or Territory other than NSW, Registration fees applicable to that State will apply. Legal / Conveyancing Fees
Again these fees may vary depending on your situation. Flat Fee Conveyancing usually starts around $600.00. To this you need to add additional charges for extra searches, inspections and reports as required. These may include Title Searches, Drainage Diagrams, Surveys, Pest Report, Swimming Pool Inspections, Building Reports, Septic Inspections, Strata Reports or Certificates from Councils, Water Board and others. Also Disbursements will be payable which is the name given to reimbursement of Council Rates etc to the previous owner if these were paid in advance. Lenders Mortgage Insurance
Lenders Mortgage Insurance is payable to the Finance Provider / Bank if more than 80% of the Purchase Price is being borrowed. All lenders calculate Lenders Mortgage Insurance in a different manner. This fee is payable at settlement. In some cases (depending on Finance Provider used) this fee can be capitalised (added) on to the Loan Amount. Cost of Lenders Mortgage Insurance is on a sliding scale depending on Loan Amount plus 10% Stamp Duty. Conclusion On top of all the fees, charges and taxes already mentioned you must not forget the premium for insuring your new home, removalist costs and other out of pocket expenses connected to relocating. As you can see there are a number of ‘Hidden Costs’ involved in purchasing a property. With the help of Berg Financial Services some of these fees may be avoided and / or reduced. Berg Financial Services has a thorough understanding of financial matters regarding Loan Products and the purchasing of Real Estate.
The professional team at Berg Financial Services will be able to assist you with all of your of borrowing needs. Please do not hesitate to contact this office via phone, fax or email if you should have any enquiries.
THE SPECIALISTS IN FINANCE
All Fees, Charges and (NSW) Taxes quoted are correct as at 1 October 2002.
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