Victorians spooked by the latest property data released this week showing house prices continue to soar can take some respite and hope from two leading experts in the banking and property law sector.
Property Law experts Parke Lawyers and Australia’s leading community bank Bendigo Bank say that prospective home buyers should be taking a route of preparedness to put them in the best position possible to get into the property market.
Parke Lawyers Executive Counsel Brendan Reilly advises homebuyers to be fully informed of what they are buying.
“Getting a qualified solicitor to look at the Contract of Sale before you go to auction puts you in the best position to bid confidently on the house, because you are fully informed on what you are buying,” Mr Reilly says.
“It could be the best $1000 of the whole purchase and save you tens of thousands of dollars in the future.
“There’s no doubt this is a vendors’ market and it staggers me to see how many special conditions are included in contracts these days that are unfavourable to buyers. Buyers need to know what they are buying.”
Mr Reilly says most people think they only need a solicitor after they have bought a house to undertake the conveyancing work, but legal issues which were not identified pre-purchase, discovered after the contract has been signed, can be very costly and most could have been avoided by obtaining legal advice before the purchase.
Meanwhile Bendigo Bank Senior Manager Nick Coker says homebuyers need to understand their finances and how the banks will view their financial position when it comes to lending them money.
“A house purchase cost, is not only the price of the house. There are other costs such as stamp duty and other government fees, legal costs, insurances and loan set up fees,” Mr Coker said.
“Assess the type of property you are planning to buy and what amount the bank will loan for that property. Normally it’s 80%, however it reduces to 70% for high density buildings with more than 35 apartments.
“Homebuyers should complete a loan application providing as much information as possible to show their financial position and ability to service a loan and also the contract of sale so the bank can view the property to be purchased. The bank will undertake credit checks, but at Bendigo, we also want to set up a long-term relationship with our customers. You’re more than a set of numbers,” Mr Coker said.
Purchasers need to further consider insurances, such as mortgage insurance if the bank requires this after the valuation, home and contents insurance, loan protection insurance and income protection insurance.
The bank also offers various loan options such as principal and interest or variable rates and buyers need to consider what loan structure best services their needs.
Mr Reilly and Mr Coker strongly advocate that pre-planning and showing diligence over the legal and financial components of buying what is the biggest asset in most people’s lives, can give prospective homebuyers a less stressful route to home ownership and helps them overcome the doom and gloom they hear everyday about the unaffordable housing market.
The latest REIV property data released this week shows Melbourne’s median house price has hit $826,000. It is the first time it has surged past the $800,000 barrier. The median house price in Melbourne at the end of last year was $770,000. This is an increase of 7.6% in the first three months of this year.
Other housing options with a lower financial threshold to get a toe-hold in the property market proving a popular investment, are one-bedroom apartments.
New, modern-day needs and opportunities are opening for this style of accommodation, especially by the Air BnB market and single people wanting to live closer to their place of employment.