Experiences of buying a house - Pt 3

I must first apologize - my time priorities tend to get a bit disjointed at times and without motovation I tend to lose track of projects. But again, I have to thank all of the comments and everything from people (even those I haven't spoken to in ages!) about my blog and how it's influenced people to even think about buying.

Pt 3 - Money, Mortgages and..umm.. Money

Money is a funny thing. It can change so much and cause so many problems. But at the same time, it can mean the difference between living the life you want and the life you can "deal" with. The $80k I got changed everything for me. It allowed me to purchase much closer to where I wanted to live - in a much more desirable area. That said, it still didn't push me into New Farm or anything, but it at least got me into the Brisbane City Council (BCC) Bracket.

Let me take a moment to mention Councils. Where you decide to live can make a huge difference on what happens after you put down an offer. The council catchment of where your house is located can decide many things - What your rates will be for the time you live in your house, How much you'll be paying in searching fees (more in a bit), When your bins are collected, Who represents your local area, How much your water is, If you can have 3 dogs or 1 - and so on.

It's important. Rates can drastically differ between, say, Ipswich City Council and Logan City Council. Level and quality of services can too. Some councils are contactable 24 hours a day, some only on weekdays between 9 and 5. When you're renting, you'll probably never deal with your council - when you own, they become a bit more important.

Rates are the 3rd largest ongoing tax you will pay for the rest of your home owning life. Next to Income Tax and GST - Rates can clock you for between $1400 and $2000+ per year. What they cover differs from council to council, but usually its the big three - Sanitation (Bins/Sewage), Water, Roads. You don't pay your rates, your bins don't get collected and you (may) lose your water supply. Owning a house isn't just a mortgage, it's the quarterly log of rates too.

Councils also take care of local infrastructure planning and roads. You want to renovate? You go to council. Your road looking a bit crappy? You go to council. Need to register your dashund? You go to council. Rates are based on how much your house is worth - they also include things like levies, which can be for absolutely anything. If council is pumping a ton of money into your area, for example, expect to see a nice big fat levy on your next rate bill. Rates pay for your city. Councils aren't funded by Income Taxes (Federal Government) or GST (State Government), just your rates.

Since we're talking about money, I might as well get into the other fees.

When you buy a house, there's a number of fees you need to pay. Namely - Stamp Duty, Conveyancing Fees, Mortgage Duty (sometimes) and whatever your bank charges you. These can get pretty pricey. Stamp Duty in some states for a $400k purchase can be around 3-4k, but thankfully in the past few years it's been phased out for first home purchases or purchases under a certain amount.

For example, in QLD, there is no Stamp Duty on purchases under $400,000. Nice for you guys, bad for me - I forked out $1,100 back in 2006, and that was reduced! Mortgage duty is another tax that the govt can (and usually do) charge, but the bank will usually automatically include it in your loan. How nice of them eh?

Conveyancing is the process in where your house is moved officially from the previous owner to yourself. It's usually done by a solicitor or a special agency. Most will do it for a flat fee but make sure they understand if you have a special time frame, otherwise it can drag on for ages, especially if they are a big firm and have many other (more important) clients.

It involves things like searches, where the state govt and the council provide information on the lot, make sure its zoned correctly and there's no plans to dig for uranium there or anything. They also provide the last valuation of the land, which can come in useful (you'll get it mailed to you every year anyway). Most importantly, the conveyancer will organise the process of the house deed handover (usually from one bank to another) and generally everything else.

You *can* do this yourself but definately not as quickly or as comprehensively. Your solicitor will generally take care of the lot and any problems along the way. Trust me. Pay your $600 or whatever and forget about it, you've probably got your own shit to worry about at the time. Don't be a cheap arse when it comes to this! Nothing could be worse then being caught out on a technicality when it turns out you only bought half a house or something.

Solicitors on the whole aren't too bad. They don't fuck you like REs (since you're paying them, haha) and if you find a good one like I did they do a good job and look after you. Try to stay away from the big conveyancing businesses unless you're recommended - I got some terrible service from one I initially chose and was glad I ended up using a solicitor directly.

Also take into account all the things you want or need. Air conditioning, Solar hot water, Blinds/Curtains, Furniture etc.. all these things cost money and you're not going to have any for a while, probably up to 2 years after you buy. You're going to have a lot of short term debt my friend - thank god for the FHOG right? :)

But anyway, enough about that, lets get back to the house. Now, I turned my search towards the Centenary parts of Brisbane. Suburbs including Middle Park, Jindalee, Sinnamon Park and so forth. The area was ideal - low crime rate, reasonable PT, nice communities, tons of local amenities, great highway access, only about 15mins from the city on a good day.

This search was extremelyyyyyyyyyyyyyyyyyyyyyyyyyyy taxing. Remember I mentioned The viewing grind? Well, this was it. And I mean grind. I spent day after day going through almost every single house in my price range. Over about 7 different agencies. Signed my name up to them - got calls about houses just about to go on the market. This was a blessing and a curse - I got in on the ground level about new houses but I got shown a lot of just absolutely terrible houses. I also had to take a ton of time off work.

I mentioned in another post about the uselessness of online listings - this is 100% true, especially in a sellers market. Almost every house I looked at online was either sold or was about to be sold. Take it from me - Online is great for getting an idea on market price, but not on actually looking for properties. Take some time out and scour the boards at local real estates, get your number in their phones. They update those listings on the shop windows a hell of a lot quicker then they add listings online.

Here's a tip, write down what you want. When you go look at the house tick it off. Make sure to include things like shops, schools, post offices and other amenities near by. Take a note of things like graffiti (especially on private property), rubbish, state of roads and public buildings and so on - these are a good indication of the area and whether its being looked after or invested in. Small councils with good areas and bad areas - lets just say the bad areas don't get lots of money.

I viewed non-stop for about a month or so. I went through some amazing places and some absolutely dreadful, over priced places. Then I thought I'd found a winner... or so I thought.

Check back soon for the next part of my story.

In Part 4, More on the overall story of my purchase, including the nasty surprise on my first contracted house plus Auctions and whatever else comes to mind :)

In future parts I'll also cover Stratas (Body Corporates), private listings and SPECIFIC things to watch for in contracts and a couple of other tidbits. Probably more rants about RE's too. Bastards.