Buying your first apartment can be daunting. There is a swag of information to be worked through and a dictionary of new terms to be understood.
If you don’t have legal or real estate experience, it is best to hire a conveyancer, a person who specialises in the contracts and legalities of property purchase, to ensure a painless transition to your new home.
If there is anything at all that you don’t understand about your purchase, ask the conveyancer or the sales agent. It’s your money and your home.
Interest The amount you pay the lender in return for the loan of money. Interest rates change depending on the economic climate, which means your repayments would increase, so you need to be sure that you can afford to pay the loan if a higher rate is charged.
There are two main types of interest — variable and fixed. A variable rate will move up and down; a fixed rate is the same for a set period, but often higher than the variable rate at the time it is fixed and you may lose out in future if rates drop. A honeymoon rate is low for the first year of the loan, but the long-term rate after the honeymoon may be higher than the variable rate.
Interest only loan During the term of the loan, you only pay the interest. At the end of this time, the loan is repaid as a lump sum.
Lender’s Mortgage Insurance Commonly known as LMI, this is insurance that a lender takes out to protect itself in case you default on the mortgage. It is generally necessary if you borrow more than 80 per cent of a property’s value.
Body Corporate or Owners Corporation You become a member of your building’s Owners Corporation when you buy. You pay a regular fee to the Owners Corporation which manages and maintains common property.
Certificate of Title The government-issued document that identifies you as the owner of the property.
Common property Property used by all owners in the building, such as the foyer, driveways, the pool and garden. It is maintained by the Owners Corporation.
Conditions of sale The conditions that apply to a sale contract between you and the vendor.
Contract of sale The agreement between you and the vendor.
Cooling-off period You have between three and five days after signing a contract of sale, depending on the state you live in, to change your mind. If you decide not to go ahead, you may be charged a penalty. When the period ends, you are legally bound to buy the property.
Date of settlement The day when the contract of sale is finalised, payment is made and you move in.
Exchange of contracts Vendor and purchaser each sign a copy of the sale contract and the deposit is paid.
Government grant If you are buying your first home and plan to live in it, you may be eligible for several thousand dollars in government grant, depending on the value of the property. This is often referred to as a First Home Owner Grant. Conditions vary from state to state.
Stamp duty A government tax levied on the market value of the property which is paid by the purchaser. Stamp duty concessions and exemptions may apply for owner-occupiers who are buying off-the-plan. Check what’s happening in your state.
Strata title The scheme of ownership whereby each owner owns a part of the building (an apartment) and has joint rights over common areas.
Valuation The estimated value of the property determined by a person who is licensed to carry out these valuations.
Vendor The person or company selling the property.
Vendors statement or Section 32 This document contains information that could affect your decision to buy the property, such as zoning, the rates payable on the property, Certificate of Title, and any government proposals that could affect the property.
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