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Australia - Buying Property
Step 1: Determine the budget and arrange for mortgage pre-approval
Expats with permanent residence status in Australia qualify for a First Home Owner’s Grant. Eligible applicants are entitled to a one off grant of AUD $7,000 to put toward the purchase of their first homes. Although this is a good amount to add to one’s home purchase coffer, it is not easy or affordable for an expat to afford to buy property upfront. However, there should be no cause for alarm because most people living in Australia use mortgages to purchase properties.
Getting a mortgage in Australia
Various factors determine an expat’s eligibility for a loan. However, many lending institutions consider expats’ visa status and credit rating when determining applicants’ eligibility for mortgages.
You may need to apply to the Foreign Investment Review Board (FIRB) for permission to buy real estate. Their decisions however are based on an individual’s financial situation. The lender and financial climate influences the amount of money that may be given in a mortgage. Many lenders will only lend up to 80% of the property value to a temporary resident. On the other hand, expats with working and spousal visas as well as permanent residents may borrow between 90 and 95 percent of the property value they intend to purchase. Expats who want to borrow more can apply for financing from specialist mortgage brokers.
Ultimately, the income of the loan applicant determines the total amount that will be granted as mortgage. It is relatively easier to qualify for a mortgage if you have good credit ratings and significant income to repay the mortgage. There are no higher charges or special interest rates for expats. They may even qualify for better interest rates if they agree to make higher monthly payments.
Step 2: Choose a location
It is important to look for real estate property in the city you intend to reside. In addition, research trends in housing prices before considering buying property. Consider renting first while familiarizing yourself with the property market.
Step 3: Find a dream home
This is a time consuming procedure that should preferably be undertaken during the house-hunting phase. One of the easiest ways to conduct this search is by using online property websites, which allow you to look at listed properties with multiple estate agents. You can even use filters to narrow your search. You might also want to keep records of homes for sale and properties that have already been sold to get a better idea of market trends.
Step 4: Buy
The formal purchasing of property usually involves mediation through an estate agent managing the property. The buyer should approach the agent with a price and the latter will act as an intermediary between the buyer and the seller. It is advisable to research property prices before approaching an estate agent with your offer.
The legal sales documents will be drawn up once a price has been negotiated.The process differs from state to state. It is important for expats to have a real estate attorney to guide them through the property purchase process. In addition, avoid signing unconditional or exchange contracts before having your financing fully approved because it will become difficult to back out of the contract.
For your consideration
You may be required to pay stamp duty on the purchase price of the property you purchase. However, first time buyers may be exempted from paying this fee in some territories. Lender application fee, lender mortgage insurance, mortgage registration fee(for government), land transfer fee, legal fee charge by solicitor, and cost of conveyancing and checks on structure and pest situation are some of the additional fees you are likely to incur. In addition, consider buying home insurance once you have purchased the property.
Real Estate Agents Licensing Requirements
Becoming a licensed real estate agent in Australia requires years of training and in-depth knowledge of market trends. The education and licensing requirements usually vary from one territory to another. An estimated 5.6 million people from over 150 countries worldwide have bought property in Australia since 1945.
Deeds and property registration
Registration of properties in all states and territories is based on the Torrens principle of title registration. The title of the land is the official record and each state or territory has a central register of all land showing the owners. Additional information about deeds and property registration can be found on the Australian government’s website.
The Top 10 Mistakes to Avoid When Buying Property
1. Lack of research
Research the property market in Australia to understand market trends and property values. This will also help you get the best price during the negotiation phase.
2. Thinking Selling Agents are there to help you, the 'buyer'
Real estate agents work for the seller and not for you. Some of the questions you need to ask a real estate agent include:
* How did you come to the asking price?
* Are there any recent sales in the street or surrounding streets that can compare to this home? If yes,urge the agent to provide evidence.
* What offers have been made so far on the property?
* How long has the property been on the market?
These questions will help you gather important information that can help you establish the value of properties on the market and price flexibility.
3. Searching without finance approval
You should first be certain of the amount of money you can borrow before you begin your house hunting.
4. Overstretching your finances
The two rules to follow to ensure you do not find yourself in this situation are:
1. Make sure your monthly repayments do not exceed 25% of your total household income.
2. Do not borrow more than 80% of the property value to avoid paying mortgage insurance.
5. Ignoring inspections
Many people do not seek appropriate inspections before buying property in Australia. Avoid buying properties with excessive structural damage.
6. Not factoring in running costs
Do not rush into making offers on properties before determining whether you can afford the running costs such as council rates, water rates, and land tax.
7. Being influenced by rental guarantees
A good property does not require rental guarantee.
8. Buying property sight unseen
This is a recipe for disaster. Virtual tours on the Internet may not provide the details you need. You have to conduct a site inspection to ensure that you end up with the property you want.
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