Buying the Right Property for You

You need to know what sort of home you wish to buy and where. After all, you will be living it for at least several years, probably longer. You definitely need to be happy in your home. If you cannot afford a home you want, it may be better to wait and save until you can afford the required deposit. You may also get a better paid job in the meantime.
But be realistic – do not aim for a million dollar property if you are on a low income. Consider a unit instead of house, but be aware that you are required to pay regular maintenance to the Body Corporate, including special maintenance payments, which can be expensive.

When searching for your property, you should be aware of the difference between sales price and market value. Sales price is merely the nominal price at what the property has sold.  The market value of a property is its estimated current value. Because of the volatility of the property market, sales price does not always equal market value.

Lenders lend against the market value of the property, not the purchase price. If the lender believes that the purchase price is overpriced, you may not be able obtain the loan amount you require. To convince them that the price is close to the market value, you may need to do some research. Have look at similar properties in the area. If their purchase prices are close to the price of the property you wish to buy, you may have a case for convincing the lender that they have underestimated the market value of the property.

You should also do some research on the property and its neighbourhood, particularly factors that could push the market value down. Are the current owners selling in hurry, particularly if they have only lived there for a short time? Go to the inspection, and look at the condition of the house. Is it structurally sound? Look for any cracks, paint peeling off walls, rising damp. Is there an unpleasant odour in the house? Are there frequent low- flying planes overhead? Is the traffic outside very noisy? All these things may decrease the market value of the property.

In determining market values, lenders may look at the types and condition of neighbourhood properties, the percentage that are owner occupied, vacancy rates, housing and rental price ranges, the quality of government services, and the convenience of supermarkets and other major stores, employment centres, and the provision of parks and reserves.

You also need to check the legality of the property. Residential buildings must conform to all zoning, occupancy, environmental, and safety regulations.  Some of blocks of units have been illegally modified, such as subdivision and consolidation of units, and have also been illegally repaired, rewired and re-roofed. If you buy a property that contravenes any regulations, this may be discovered by property inspectors, and you may be required to bring the property up to the required standard, at your expense.

For further information on home loans go to http://www.creditworld.com.au/home-loans.html.

Summary

• Before applying for your loan, know what type of property you wish to purchase and where.
• Look at some properties to find out if you can afford the ones you want.
• The market value may not be the same as the sales price. Lenders lend on the basis of the market value.
• If you disagree with the lender’s assessment of the property’s market value, do some research on similar properties in the area, and check the condition of the property and neighborhood.
• Make sure the building meets all government regulations.

Article correct at its author date: Jan 2007. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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