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After you have confirmed that you are eligible to buy a property in Australia as your house, the next thing is for you and your spouse or your loved ones to determine the budget that you can afford as a household unit. If you are the lucky few that do not require any loan, the budget will be as simple as what you want to spend for your new home. However, if you need to borrow from a financial institution (be in off-shore or on shore) is inevitable, you will need to consider your budget carefully as the repayment amount may differ vastly depending on the financial institution that loan is taken from and along with type of loan that you have taken up.

You will need to consider your budget affordability for the entire duration of the loan term, and what this means is that you will need to take into consideration of what may happen in the next 12 months (e.g. new baby on the way – congrats to you and your spouse if that is the case) or do a crystal ball gazing exercise to foresee what may happened after 12 months (e.g. spouse becoming a homemaker or perhaps the potential of interest rate moving up). As you may already know by now, every point of interest rate going up can probably effect you financial position adversely.

Thus, when considering your budget affordability, following are some of the cost that must be taken into account as it may impact you immediately one you sign on the purchase document:

01. stamp duty and GST

02. inspection fee

03. home building insurance

04. loan establishment fee

05. legal or conveyencing fee

06. council and water rates

07. moving cost

The savings grace from all the cost above is the First Home Owner Grant Scheme (“FHOG”) which is a national scheme to introduce by the government to offset the GST introduced. I will dive deeper into the subject of FHOG in the future.

The topic next week will be on “research for loan and arrange for pre-approval”, unless there are feedbacks from readers via this website and/or friends directly on other points highlighted above. Have a great week ahead.