Hi All,
I am a property investor from South Africa and I plan to start investing in Australia when I arrive at the end of the year.
I am very interested in the costs associated in buying a property. Lets take an example:
If I bought a property for $200 000 and got a mortgage for $200 000, what out of pockets costs would i need to pay? Some that come to mind are:
1: Fees you pay the attorney to handle the property registration
2: Fees you pay the attorney to handle the mortgage registration
3: If you were buying in a trust or a CC, perhaps other taxes?Maybe someone could send me a full breakdown of all the costs associated with my above property example when buying in your personal name or in a trust.
Regards,
RobbieYou would have:
– Stamp Duty
– Govt fees such as registration of mortgage etc
– Legals and disbursments (title searches etc)
– Building and pest (optional)
– Loan fees
– Lenders Mortgage Insurance (usually if you borrow more than 80%).All this would generally be the same whether you are using a company or trust or individual – loan fees may rise slightly for a company or trust.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
So on a purchase of a $200k, would you be able to give me a rough breakdown of the actual costs involved?
estimate 4% to 5%
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
So the total costs to purchase a $200k property shouldn't be more than $10k? Would this be the same sort of costs if buying in a trust?
Lastly, can these costs be included when applying for finance?
Example: when you put in an offer for the property, you offer $210k ($10k more) BUT the seller agrees to pay for all the costs associated with purchasing the property (which you mentioned above).
Stamp duty is the major cost and this will vary from state to state with some states charging more for investment properties. The next major cost may be LMI which will vary depending on the loan LVR and the amount, IO/PI, bank etc.
Banks will only lend on the lesser of valuation or price. So you could add the costs to the price adn get the seller to pay. If the bank comes up and values it as $210,000 then you may be able to borrow 95%/etc of $210,000.
But this may be similar to the vendor providing a rebate and this should be disclosed to the bank and then they may just base the figures on $200,000. Also solicitors have been warned by the law society not to participate in these sorts of rebate schemes.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
RobbieP wrote:Hi All,I am a property investor from South Africa and I plan to start investing in Australia when I arrive at the end of the year.
I am very interested in the costs associated in buying a property. Lets take an example:
If I bought a property for $200 000 and got a mortgage for $200 000, what out of pockets costs would i need to pay? Some that come to mind are:
1: Fees you pay the attorney to handle the property registration
2: Fees you pay the attorney to handle the mortgage registration
3: If you were buying in a trust or a CC, perhaps other taxes?Maybe someone could send me a full breakdown of all the costs associated with my above property example when buying in your personal name or in a trust.
Regards,
RobbieHi Robbie,
There is also a handy calculator on the ANZ website that can give you an example of costs to buy a property, it takes into account the state and whether it is for IP or PPOR. Heres the link:
http://www.anz.com/common/calculators/homeloanfee/exampleau.asp
Hi guys,
With regards to this topic..
Lets say you managed to source a property for $150 000, which is worth $200 000. You agree with the seller that you will offer them 4-5% more, lets say $160 000 BUT the seller is then liable to pay for:
Stamp Duty
Govt fees such as registration of mortgage etc
Building and pest (optional)This will be stipulated in the Offer To purchase, so nothing is hidden from the bank or attornenys handling the transfer. If you are lucky enough to get a 100% bond, when the funds get distributed by the attorneys, the seller gets his $160 000 LESS all the expenses he agreed to pay you end up buying a property without using any money.
I have structured a few deals like this in South Africa, I was just wondering if you could do the same in Austrlia?
Regards,
RobbieHi Robbie
Good luck in getting either of the mortgage insurers to accept that in the current climate.
Dont want to put the dampners on the idea it just wont happen especially under NCCP (Our new Credit Laws 1.1.11).
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks,
Then what I guess i'll do is refinance my South African portfolio, then move the money to Australia and use these funds for deposits or to pay for all these other little costs.
Regards,
RobbieRobbie , be advised, there are changes afoot in NSW for buyers & sellers: soon property inspections will be paid by the vendor but reimbursed by the buyer. Thus reducing costs for buyers going into auctions & being revenue neutral for vendors (if they sell).
I bought a property in QLD. The contract price was 380k, subject to Building and Pest. I didnt like the report much and negotiated 10k off the purchase price.
However i still had to pay stamp duty on 380k !! I think your proposal would suffer similarly (ie higher stamp than required)
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