By Annie Glover
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23 Nov, 2023
Navigating the property market can feel like a full-time job in itself. The price tag on a property is just the tip of the iceberg when it comes to expenses associated with purchasing real estate. As Synergy Business Finance's Director Brendan Philp emphasises, "Our goal is to ensure our clients have a clear understanding of the entire financial landscape when purchasing a property. Beyond the purchase price, we take into account various costs that can often catch buyers off guard." Beyond the purchase price, there are additional expenses to consider: Property Valuation: Before finalising a property purchase, a professional valuation is essential. This helps determine the property's market value and the final loan to value ratio. Valuation costs vary depending on the property's location and complexity. For standard property purchases many lenders will cover the cost of the valuation but it is important to know whether this will be a cost you need to consider upfront. Mortgage Registration: This fee covers the cost of registering your mortgage with the relevant government authority. It's a necessary legal step to ensure the lender has a claim on the property if the borrower defaults. Stamp Duty: Stamp duty is a significant cost and varies by location and property value. It's a tax imposed by state governments on property transactions. Consulting with experts can help you understand the applicable stamp duty in your area. Lenders Mortgage Insurance (LMI): While not always applicable, LMI can be required if you have less than a 20% deposit. It protects the lender if you default. However, it's an extra cost you should consider when determining your budget. Building Inspector: Hiring a building inspector is crucial to uncover any hidden defects or structural issues with the property. While it incurs a cost, it ensures you're aware of potential problems before committing. Conveyancing: Conveyancing involves legally transferring property ownership. It's advisable to hire a professional conveyancer or solicitor to handle the legal aspects of the transaction. Registration of Transfer: This cost covers the legal transfer of ownership from the seller to the buyer. It ensures the transaction is legally recorded, safeguarding your ownership rights. Venturing into the property market demands serious consideration. A substantial deposit is often required to secure a loan, which can be a challenge when you're juggling rent and other expenses. This is where the option of using a guarantor can prove valuable. "A guarantor can be an excellent solution for those who don't have a 20% deposit and wish to avoid the extra cost of LMI, " Brendan Philp continues. "If you have a close family member who's willing to use their property as security, it can provide the boost you need to step onto the property ladder." A guarantor can be a lifeline if: You lack a 20% deposit and wish to avoid the extra cost of insurance (LMI) A close family member is willing to use their property as security The added benefit is that, as your property equity grows, your guarantor's commitment can be released. If you're seeking insight into the intricate mechanics of this approach or guidance on discussing it with a potential guarantor, our team is here to help. Contact our Synergy Business Finance’s team to gain a comprehensive understanding of the process and to explore strategies for addressing this topic with a potential guarantor.