Buying a Home -
Affordability
When you are buying a home, it is imperative that you consider very
carefully about whether you can afford it.
Below is an advice on the
kind of matters you need to consider when thinking about buying a home. AFFORDABILITY You
may have saved, won or inherited some money, and you can afford to buy
a home or other residential property, without needing to borrow money
from a bank. If you intend to live in the home, on-going costs should
not be a problem, as they will almost always, be less than paying rent
for a home. However, whether it is your home where you will
live, or, an investment property, you should do the sums and calculate
the annual costs of keeping the home. It is a good idea to do a 5 year
plan when buying a home. It helps to make you properly plan. The Annual Costs Of Home Ownership Are: Council Rates-
Every home owner has to pay rates every year. Contact the local Council,
located where the home is situated, to get an idea of what the Council,
will charge for the annual rates. Land Tax-
In NSW, if you own a home, or any land, you have to pay land tax, every
year, unless you are entitled to an exemption because it is where you
live. However, the requirement to pay land tax is also dependent on the
land value. This is called the threshold, which is $368,000.00 for
2009. If you own several properties, all of the land value of
properties not entitled to an exemption, are added together, and, even
if the land value of one property, is less than the threshold, if the
value of 2 or more of these non-exempt properties added together go
over the threshold, you will be liable for land tax. Therefore, when
buying a home you will not live in, you need to check, whether you will
have to pay land tax. If you think you may have to pay land tax, when buying a home, click here to find out how much it will be.
Insurance-
When buying your home, it
is important that you insure your home for the proper replacement or
re-building value. If anything, over-insure on the replacement value.
It may cost a few more dollars, but if something happens, it will be
worth it. If you under-insure, on the cost of re-building your home, and
it is totally destroyed, you may not get as much as you think. Insurance
policies have a little understood clause about under-insuring. If the
replacement or re-building value is $500,000.00 and the insured amount
is for $250,000.00, and the house is totally destroyed, you won't get
$250,000.00. you will only get $125,000.00. You have only insured it,
for half its replacement value, so they only give you, half of the
insured amount. This is an example only, and you should quiz your
insurance company about it. The insurance companies will work
out the percentage of your insured amount, as a percentage of the
re-building cost, and then pay you that percentage, of the insured
amount. If you need more information, also ask a solicitor or
residential conveyancer about this. If the home is an
investment property, you might want to consider getting tenant
insurance to cover you for damage caused by a tenant. Maintenance & Repairs-
Every home costs money to keep. When buying a home, you need to keep in
mind that there are things like painting, replacement of water heaters,
fences, and other things, that just wear out. You should budget at least $1,000.00 a year, depending on the age of the home, and the report of
the building inspector, discussed later. Tenants -
If the home you are buying is an investment property, and you plan for
the rent to provide an income, or to pay the mortgage, or part of it,
you should budget for having no tenant for approximately 5 weeks every
year. Everyone wants to have a tenant for 52 weeks every year, but,
better to budget now, than to get caught short, later. It is
expected that about every 5 to 10 years, money will also be spent on
painting and replacement of carpets and the like in an investment
property.
You should now realise, that there is a lot to owning a home, and, that
proper budgets should be done, to ensure that you can afford the ongoing
costs, involved in ownership.
Buying your home is called conveyancing, and is an
area of law, where if mistakes are made, it can cost a lot of money. Unless you have the necessary skills and knowledge, and, the time, you
should get a solicitor or residential conveyancer do it for you. Contact:
Phone 02-4333 5313 Fax 02-4333 5144
email:
acs@drakegroup.com.au
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