Alright so you’re either living at home with Mum & Dad, renting (and therefore paying for someone else’s mortgage) or have just moved back from living overseas for a little bit too long… and it’s finally time to buy a house – sweet! But before you start going to open houses, being chased up by real estate agents or even thinking about home loans, it is worth asking, “what are the hidden things I need to know about buying a house?”
Don’t worry, this is a perfectly normal question. You aren’t taught how to buy a house at school and while there are countless courses on buying and investing in property, they usually end up trying to sell you something at the back end. So from our own first-hand experience, here are our top 5 things you should know about buying a house – to read before buying a house!
1. The First Home Buyers Grant / Great Start Grant
In Queensland, you are only eligible for the First Home Owners Grant on newly constructed properties. So this includes if you are buying a brand new house, apartment or unit ‘off the plan’, if you are buying a block of land and building your own house or if you are buying a brand new townhouse valued less than $750,000. This will form part of your deposit (the 5–10% we talk about in point 3) and something definitely worth considering taking advantage of because you can only use it once on your first home purchase. We will talk about this in more detail next week, so stay tuned!
2. Stamp Duty
The good news is that if you are buying your first home (i.e. haven’t owned property before) in Queensland, you do not have to pay stamp duty – provided you are purchasing a property for under $500,000. The bad news is that if you are purchasing a property over $500k you will have to pay some stamp duty. If you have enough savings then you will be fine, but if you’ve got a champagne taste on a beer budget you may need to reconsider your options – or think about staying with Mum and Dad for a few more years!
3. Savings & do I need a deposit (or ask Mum and Dad for one!)
The short answer is yes. The long answer is you need a minimum of 5-10% plus a bit more if you don’t want to pay Lender’s Mortgage Insurance or sleep on the floor and have a lounge room that consists mostly of milk crates and Besser blocks. If you don’t have cash savings then you can always ask the bank of Mum and Dad.
4. Nasty Government Fees
Nobody likes fees. Nobody. And what’s worse than fees? Unexpected fees! Enter Government Registration, Registration of Mortgage (QLD) and Registration of Discharge of Mortgage (QLD). These suckers are $168.60 each, and you need to pay them upon settlement of your new home. Don’t worry, your bank will physically pay them so you don’t need to be running around getting cheques written. In the scheme of things they look small but if you are on a tight budget you need to remember them!
5. Other people that are involved when you buy a house
Here are some people you have probably never come across before who you will be spending a lot of time talking to. We’ve included just a brief description of what they do, and how they help.
- Solicitor/Conveyancer – Effectively lawyers that specialise in property. They help with reviewing your Contract of Sale, do a heap of searches to make sure people have paid your future properties rates and government fees, and coordinate settlement with the people you are buying the property from.
- Mortgage Broker – They get the money from the bank to you, easily and well. They also make sure you get the most suitable loan product for what you’re looking to do, and for what hopefully is the best price. Lowest interest rate doest necessarily mean best, so make sure you look through all options.
- Valuer – They can be your best friends and sometimes your worst friends in property. They represent the bank and go and see your property to make sure (1) you’re paying broadly the right amount for your property, and (2) physically inspect the property on behalf of the bank to make sure there aren’t any visible issues with it (e.g. holes in walls, massive power lines in the front yard, or backed onto the Bruce highway). However, they don’t look at anything structural so this is where our next friends help.
- Building & Pest Inspector – They ensure your property is free from termite damage, water damage and all sorts of other nasty stuff. Make sure your Building & Pest Inspector is a licensed builder (their licence number is usually on their website and business cards) because those kinds of issues can cost a lot of money if you don’t pick them up early. The reports usually cost between $300-500 and can be well worth it if they find any big issues that were otherwise hidden.
- Quantity Surveyor / Depreciation Expert – These guys come in handy when you are buying an investment property. If you’re buying your first home you don’t need to worry about these people for now, but still good to know. In short, they help put together a depreciation report which can potentially provide tax deductions at the end of the financial year.
This is just a drop in the ocean of buying a property, so make sure you are asking everyone lots of questions and speak with professionals that know what they’re talking about! You can click here to get in touch with a Red & Co Advisor. Keep posted and watch our blog as we post lots of practical and useful articles to help make buying a home much easier!