What are the Costs Involved in Buying an Investment Property?
Are you planning to buy an investment property? Buying an investment property is a financial commitment. You need to be aware of all the costs involved in doing so. Knowing what these costs are will help you know how much you can afford and how much you are going to owe.
So what are the costs you should take note of when buying an investment property? Below are the common costs to consider:
1. Hiring a Buyer’s Agent
While hiring one involves certain fees, you can’t underestimate the value they provide. A buyer’s agent helps find the right property for you. They can even help you negotiate the price with your best interest in mind. Even when properties are not yet on the market, they can sometimes find them and make an offer already. Working with one makes buying an investment property so much easier.
2. Home Loan Fees
There are some lenders that may charge fees when you apply for a home loan. With the help of your agent, see if you can avoid paying for the fee. Your agent can also negotiate with the lender to waive it.
3. Mortgage Registration Fees
The Australian government requires mortgage registration. This helps them check on future claims on the property. Registering the mortgage leads to a fee. The property acts as the security for the mortgage. Keep in mind, though, that the fees vary by state.
4. Lender’s Mortgage Insurance or LMI
If the home loan you apply for is more than 80% of the property’s purchase price, the lender may ask you to pay for LMI. The LMI or lender’s mortgage insurance protects a lender from payment defaults.
The LMI is usually already included in the home loan. The amount depends on the property type, property size, and the lender.
5. Conveyance and Legal Fees
A conveyancer takes care of the legal aspects of buying an investment property. Small legal mistakes can already lead to significant costs.
6. Home Inspection Costs
Before you buy the property, make sure to schedule a home inspection on it. Most common inspections involve pest and building inspections to ensure structural soundness. If the property is in a regional area, expect to pay more.
7. Stamp Duty
The state governments charge a tax on the property’s value. This is stamp duty. The amount of stamp duty depends on the location and the type of property you are buying.
Buying an investment property involves several costs. But these costs should not deter you from buying one.
You can reach out to me to know more about what costs you can expect to pay. I’ll help you understand these costs and assist you throughout the buying process.