# Purchasing Property in Australia



## nemesis (Aug 17, 2011)

Dear All,

I might need to seek advise on purchasing Oz property.
1) What's the base lending rate for Oz?
2) What's the average bank interest rate?(estimated?)
3) What are the hidden cost? Such as lawyer fees?council fees? Property assessment fees?Sewerage treatment fees?
4) Any property gain tax?if yes, what's the percentage like and what are the requirement?

Hopefully anyone could help me as i'm looking forward purchasing a property in Oz.


----------



## nemesis (Aug 17, 2011)

Hello, anyone could help me here?Please....


----------



## ardevelopments (Mar 9, 2012)

*No Idea*

hi.. I have no idea about your quarry.


----------



## nemesis (Aug 17, 2011)

Ok, i'll rephrase again.
1) I believe Oz government impose some sort of base lending rate to bank which implement inside the housing loan plus the interest rate by the bank. I know current principal plus interest rate is approximate 6% - 7% but i just want to know what is the base lending rate impose by Oz government.
2) I know the answer already.
3) I know there's sort of council fees which depends on different suburb on how they charge. How about other services fees such as sewerage charges, housing tax charge yearly or is there any charges that i need to consider before purchasing any houses?
4) The resale of the property, does Oz impose property gain tax which you gain profit of re-selling the property. what are the tax like? Any minimum years requirement to hold the property then only to sell?


----------



## robboat (Jun 12, 2012)

Is the property for you or for an investment?
Is it in your name or a company name?
Where do you intend to purchase?

Will it have a substantial mortgage? e.g more than 80% LVR
Have you sufficient disposable income to meet mortgage payments?
Can you prove your income....or is it cash?

Will you use a lawyer or a conveyancer for settlement?

All these questions affect the interest rates, costs of purchase and ongoing tax for holding or selling the property.
The council area and states also have different rates of tax and charges for services.

So - hard to give definite advice without detail......

Good luck.


----------



## Dexter (May 5, 2010)

> 1) What's the base lending rate for Oz?


RBA official cash rate you mean? 3% at the moment.



> 2) What's the average bank interest rate?(estimated?)


Slightly below 6% per annum



> 3) What are the hidden cost? Such as lawyer fees?council fees? Property assessment fees?Sewerage treatment fees?


Conveyancer cost me $2,500 last year in QLD but I know you can do it cheaper. Council payments cost me $800 in Sydney (Sutherland Shire) and over $1,000 (Brisbane) - both per annum. Sewerage treatment fees? I believe that would be included in council or water payment.



> 4) Any property gain tax?if yes, what's the percentage like and what are the requirement?


If you sell your property you need to pay capital gains tax. It is going to match your income tax rate but if you have held your property for more than 12 months, it goes down by 50%.


----------



## nemesis (Aug 17, 2011)

Wow, thanks Dexter. This is the answer I want.
Base on your reply, i must australia property still cheaper than malaysia if we look in dollar to dollar sense.
Well, I think you can't make much money on property investment coz the tax in Oz is high. It's a good news for 1st home buyer but it's not benefit for 2nd home buyer.
My aim is to purchase1st home for my own. 
Council fees is very high. Anyway of reduce it? Sorry if I ask this question


----------



## Dexter (May 5, 2010)

You can make money on property investment in Oz thanks to the local law that allows you to claim your interest and depreciation off your tax. Good return on such investment is often based on appropriate lending funds. I invested in a property 1.5 year ago. After first year just in tax return and bonuses I had a return of 72% on initial investment (property value went up slightly but is not included in this amount). 

Also, you need to remember, that when you purchase your property, you need to pay stamp duty - something around 3% of the property value. 

I don't think there is any way to reduce council fees.


----------



## nemesis (Aug 17, 2011)

72% is really high. Based on current growth, i think property price is unlikely to come down. Of course we can't buy property which is cheap (semi rural or rural area) coz the return might not that high or negative gearing. I hope property bubble won't burst coz this might affect the whole construction industry.


----------



## Neoguy (Jul 6, 2011)

Hi,
This reply maybe a little late since I only received the Jan 2013 newsletter today in ref to your thread, so for what it’s worth…

1.	The Oz Government doesn’t impose the rate to the lenders that is done by the Reserve Bank of Australia. The RBA controls the cash rate which is currently 3.0% with indications of the rate may drop on the 26th Jan or remain the same. Cash rate at 3%, lenders add their profit margins to the cash rate & deliver a rate to the market. As Dexter indicated the lenders rates are slightly below 6%. These lenders rates are the same to for all borrowers. The government doesn’t impose any additional rate to borrowers, or borrowers who are on a VISA, skilled or Sponsored Visa. A lender may impose a risk for rate margin for a non-resident purchasing a property in Australia however majority of lenders rates are the same for an Australian resident, VISA holder & for a Non-resident.

2.	As indicated above the lenders rates vary & I would suggest you for a good credit advisor (mortgage broker) to help you with dealing with lenders as a good mortgage broker would assist you in finding the most suitable product for your requirements. Additionally, the credit advisor would show you all the costs relating to a purchase and there are no hidden fees as all lenders have to disclose all fees & charges associated with any property purchase.

3.	As for government fees on purchasing a property for owner occupancy or investment you can find online web calculators to calculate the govt fees & charges towards a purchase. You can use the Neomoney website calculators. Click on the toolbox button which has a number of financial calculators to assist you with a purchase.
Conveyancers or lawyers charge an initial fee for their services on assisting you on a purchase or a sale of property. On top of their initial service cost are a list of searches that you can request which add to the cost of their fees. Again each property would have its unique search requirements, i.e. if you buy a property on a main road you would request a mains road search to make sure there are no long term plans of road widening which would reclaim part of the property.

4.	Property gain tax, is more relevant to each individuals incomes & personal circumstances therefore you would need to find a good accountant or financial planner to show you the benefits of property investments. Again as Dexter indicated you can save on capital gains by residing in the property & based the time residing in the property can reduce the amount of tax paid.

Hope the above helps…


----------



## Nikks (Jan 23, 2013)

Oh, all of this is extremely helpful to a newcomer like me. So exciting!


----------



## Neoguy (Jul 6, 2011)

Hi Nikks,

Good to see this info can assist you…

What a number of VISA holders or Non-residents don’t realise when it comes to purchasing a property here in Australia, if a husband & wife or just 2 applicants (borrowers) in a relationship apply to purchase a residential property, if one of the applicants is a citizen or a permanent resident you may only need as little as 5% deposit, where traditionally a lender would request a 20% deposit for a residential or an investment purchase.
Additionally, depending on the type of skilled or sponsored VISA (not a 457 VISA) you can obtain a loan at 90% of the value of the property (10% deposit).
Only a few lenders are offering these higher borrowing loans to specific section VISA holders on permanent or temporary Australian residential VISA’s.

Hope the above helps…


----------



## nemesis (Aug 17, 2011)

Neoguy said:


> Hi Nikks,
> 
> Good to see this info can assist you&#8230;
> 
> ...


Sounds pretty good. Any idea what's the best market interest rate for the loan? Saw some stated approximate 5.75% which seems attractive. Maybe there's some factor they didn't mention about the number of years of loan and the loan amount.


----------



## Neoguy (Jul 6, 2011)

*Loan Products & Rates*

Hi Nemesis,

Yes, rates are very competitive at the moment & what most lenders won't tell or offer you are their competitive rates which a credit advisor (mortgage broker) can obtain. From the array of lenders on our Neomoney lender panel, rates start from 5.44% as a discounted borrower rate for a basic loan product with no frills, meaning no added features. Additionally, lenders offer 'Risk for Rate Loans', the higher the risk the higher the rate or to simplify it, the lower the deposit the higher the rate.

Rate is determined on the borrower's circumstances and the type of product required to meet their personal requirements or lifestyle. For example, looking at lenders between the rates of 5.44% & 5.75% with a loan requirement of $500K, if you have only 10% deposit then out of our lender panel of approx. 60 lenders, we start to narrow down to approx. 20 lenders, out of these lenders you may need an off-set account your options narrow down to approx. 10 lenders & out of these lenders you wanted an interest only loan then you have 6 to choose from & if you on a Section Visa you end up with one lender. Lowest rate doesn't mean you have the best product if you forget to take into account any ongoing fees.

So yes, there are a few factors that come into play with each lender & borrower requirement.

Loan term years, 30 is maximum & one lender offers 40 year term. 
The average loan term in Australia is approx. 3 years, not that the loan is paid out, borrowers tend (which we encourage reviews in 2 to 3 years) to review & refinance with other lender for a better product or their lifestyle changes in this period of time.

Hope the about assist your endeavours&#8230;


----------

