13 Extra costs to be aware ofbefore buying a property

WelcomeStarr Partners Liverpool was first established in 1990. The previous owner commenced the business with himself and a receptionist. After over 15 years, of hard work and continual success, in 2005 he decided to part with the business.

In November 2005, Simon Perri, a local resident of Liverpool’s outer suburb Rossmore, and Michael O’Sullivan the current real estate director of Campbelltown Starr Partners, decided to join together in the purchase of Starr Partners Liverpool.

Between the two, they have in excess of 35 years real estate experience. Both partners decided to rebirth Starr Partners Liverpool. In doing so, they committed to some basic principals. They are, to provide the highest possible customer service to their clients, and achieve the best possible outcome for all. We believe Starr Partners Liverpool has now achieved that.

Today, we are a major force within the Liverpool area. We have seen great success for all of our clients, and regardless of the market conditions, have been able to achieve record sale prices. Over time Starr Partners has been able to amalgamate a further four offices together with their current office.

In early 2008, Starr Partners Liverpool’s success was recognised by the public, with less than 2 year of operation, Starr Partners was the recipient of the Small Business Award based on the performance and professionalism voted by their clients. The director Simon Perri goes forward to say “standing on the basic principals of providing high quality service and ensuring the best results for our clients, we will continue to do our utmost regardless, our main priority is that we ensure that our clients always come first”.

Starr Partners Liverpool stands for the highest quality service, with honour, respect and honesty in our daily dealings with all of our clients, associates, work colleges and members of the public.

This booklet is designed to assist you by offering advice and our professional service when purchasing or selling your property.

Starr Partners Liverpool endeavours to be recognised by the community which we serve as being caring, well respected and an efficient real estate agent within the Liverpool area.

We would be happy to assist you with your enquiries. Please phone our office on 9822 5999.

Simon PerriDirector & Licensee In Charge

Congratulations !

You’ve saved a large enough deposit to buy your first home.

You’ve even arranged a mortgage after shopping around for the best deal. And you’ve found a solicitor or conveyancing company who’ll do a great deal on costs for you.

You’ve covered all your bases . . . or so you think.

There are lots of costs to consider when you buy a home.

Many of them you won’t discover until it’s too late. You’ll be in the middle of the purchase transaction and your solicitor, your conveyancer or your bank will say “Oh, by

the way, you’ll need a so and so, and that’ll be another $150.00”

All those incidental costs can add up to a small fortune.

So before you begin your journey towards property ownership take note of the following list of hidden costs that you might encounter along the way.

Take them to your Solicitor, your Conveyancer and your Bank and ensure they tell you whether you’ll be subject to any of these costs - before you get started.

After all, awareness usually prevents loss.

Here’s some extra costs you may not have considered . . . (in alphabetical order) with the approximate cost shown beside each item.

13 Extra Costs To Be Aware Of Before Buying A Property

1.Bank fees are almost insidious. They creep into every transaction we undertake these days. If you are withdrawing or depositing money you can be certain you’ll attract Bank fees. In this instance you’ll also pay when your solicitor / conveyancer deposits or withdraws money on your behalf and you’ll pay when your bank deposits or withdraws money on your behalf.

2. Building Inspection

Bank FeesVarious Up To $25

Many motor vehicle buyers wouldn’t consider the purchase of a second-hand car without an NRMA inspection to check on the mechanical worthiness of the vehicle. In the same fashion it makes good sense to have a professional look at the home you are about to buy to check on all those hidden issues you can’t always see. This may be an extra cost but it’s money well spent.

From $200 to $400

3.If the owner of the property you are about to buy has paid his or her local Council Rates or Water Rates in advance you will be expected to reimburse these fees to them on settlement. Your solicitor / conveyancer will calculate the extra costs you are to pay and arrange payment. These days rates of both types are usually paid quarterly so the most you would be expected to reimburse would usually be no more than 3 months worth of Council and / or Water rates.

4. Mortgage Application Fee

Council rates / Water RatesVarious

When you apply for a mortgage with a bank or lending institution you will generally be charged this fee. In most cases these days the Mortgage Application Fee also includes one property valuation that is often worth (over) $300.00 by itself. The balance of the fee offsets the banks costs of reviewing your application.

From $400 to $1000

5. Mortgage InsuranceIf you are borrowing more than 80% of the value of the property you can expect to pay Mortgage Insurance. This is the way the bank offsets its risk – by insuring the home loan its about to give you against default. Unlike other insurance the beneficiary (the bank) doesn’t pay – you do ! And it can be expensive. If you were buying a $200,000 home and you were borrowing 95% of the purchase price the Insurance premium you’d be expected to pay would be $3325.00 – pretty expensive !

From 1% up to 1.75% of the purchase price for a 95% loan

6.For the same reasons you wouldn’t buy a property without a building inspection you certainly wouldn’t buy without a pest inspection – even if the property is brand new. Termites are a growing problem and they can do a great deal of damage in a very short period of time. So take warning – this is an essential cost and well worth the investment.

7.Mortgagees Search Fees / settlement fees / Bank Cheque Fees

Pest InspectionFrom

$170 to $300

When you borrow money from a bank for a mortgage the bank has to check on both you and the property you are hoping to buy – these are called searches and they’ll cost you (not the bank) about $50.00. On the day of settlement an agent of the bank has to turn up to hand over the cheque (the money you’ve borrowed) to the vendors solicitor. The fee for this service is usually $50.00. If you require several cheques to be handed over on settlement for different amounts you have to pay for each cheque – often up to $10.00 each.

$50, $50 and $10

respectively

8.Almost all solicitors and many conveyancers charge a fee or fees that cover all these miscellaneous charges. All up you could be looking at $20.00 or more.

9.Removalist / Hire Ute

Photocopying - Stamps - Phone Calls, etcUp to $25

Somehow you have to transport both you and your belongings to your new home on the day of settlement. Some people get a removalist and others get their mates and hire a ute. Either way there will probably be a cost and you should allow for that cost before it occurs.

Various

10.Stamp Duty on the MortgageThe NSW State Government doesn’t miss even the smallest possibility of applying a tax. In this instance there’s the cost of stamp duty on the mortgage – and again it’s a little difficult to escape this one unless you are buying for cash.

$1,141 on a $300,000

mortgage

11.A home unit, villa or townhouse is usually administered by a Body Corporate. In order to pay for the running of the Body Corporate and the maintenance of the common property each owner in the complex pays quarterly strata fees. This search uncovers how much money has been collected and how wisely it has been spent. On occasion this search will uncover the fact that a special levy has been struck to pay for some major work at the complex. Such a levy may make you re-think your decision to purchase.

12. Survey

Strata Search$180 to $250

These days the bank you are borrowing from usually requires a survey. If, however, the owner of the property you are purchasing has an existing survey of their property and no changes have been made to the property since the date of the survey you might be able to obtain a copy from the owner. This will usually satisfy your bank and you will save yourself the cost of a new survey.

$300

13.It’s true that there’s lots of hidden costs involved in the process of buying a property – but unexpected expenses don’t stop with the contract, the bank and the solicitor.

When you move into your new home there’s a couple of other things to consider.

What about . . .

• Changed / varied / increased transport cost from your new home to work.

• GST on everything involved in the process of buying a property (except bank costs)

• Building Insurance as well as contents insurance.

• Now that you’re the owner you have to pay the cost of repairs / renovation

• Now that you’re the owner you have to pay council rates, water rates and strata fees.

• Rubbish removal / cleaning costs prior to moving in to your new home.

• Buying new furniture for the new house (if the old furniture won’t fit or match)

But don’t despair – think about the millions who have been through the home buying process before you. They didn’t have the advantage of this inside information. They simply coped with these extra costs as they occurred.

Now, because you are aware of these extra costs, you can budget and allow for them.

And at the end of the process you’ll have a new home and a balanced bank account.

And finally. . .

Contact Details 3/52-58 Memorial Ave Liverpool NSW 2170

Phone: (02) 9822 5999 Fax: (02) 9824 0582

Or by email info@starrpartnersliverpool.com.au

Visit our website www.starrpartnersliverpool.com.au

This Special Report was provided to you free of charge by Starr Partners Liverpool.If you would like to take the next step on your path towards buying a property simply call our offi ce, 7 days a week, on 9822 5999 and speak with a member of our sales team – they will be happy to answer all your questions.If you would like some further information regarding buying, selling or renting property, we produce a range of Special Reports on different subjects – simply call us on 9822 5999 to arrange to have a full list of available reports posted to you.If you liked what you read in this report we would very much appreciate it if you would mention our name to your friends, relatives, neighbours and co-workers – you can be certain we’ll look after them, their property and their future.

PLEASE NOTE : Recipients of this report are reminded that, although due care has been taken in the preparation of the within contained material, prospective property buyers and sellers are always best served by making their own independent inquiries before the sale or purchase of a property.

© M. O’Sullivan 2001