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The basic home buyers guide to finances

When you’re looking to get into the property market understanding finances will keep you ahead of the game.  

Getting into the property market can both a major life changing moment and a huge investment.  

Of course, making the decision to get into the property market is really only just the beginning.  To be truly ready to buy a house make sure you know everything you need to know.  

Deposits

You are going to need a deposit to purchase a loan – the bigger the better as it lowers your loan to value ratio (LVR).  Ideally your deposit should be a minimum of 20% to avoid having to pay mortgage insurance and potentially a higher interest rate.

Stamp Duty

Unfortunately, when buying a property stamp duty is completely unavoidable.  This tax which is set by each state, is based on the market value of the property or the purchase price, whichever is greater.  So, remember the more expensive the house, the larger the stamp duty fee.

Other Hidden Fees

Stamp duty isn’t the only other fee you need to consider when buying a house.  You also need to factor in legal fees, building inspections (optional), loan application fees, lenders mortgage insurance (if applicable), title insurance and rates.  

Mortgages

Unless you’re in the fortunate to have won the lottery, you’re most going to need to get a mortgage.  To get the best deal you need to do your research get to know the facts of each loan.  We recommend engaging the free services of a mortgage broker who act as the go between the lending institution and yourself.  They will assess your situation compare and recommend the best products for your individual situation.   Remember:  your history and capacity to save will be taken into consideration by financial institutions.

Fixed Rates

A fixed rate loan is when you lock in the an interest rate for a set period of time. It provides certainty and allows you to plan for the future. 

Variable Rates

A variable rate generally offers a lower interest rate than fixed, but is one that fluctuates throughout the term of the loan.

With either a fixed or variable rate loan you still need to understand of what you can afford now and future possible rate increases.  

So know you now the basics of housing finance it’s time to get your own in order.  Contact us if you wish to discuss our financing options.

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