How To Cut Years Off Your Mortgage
Buying real estate has many hidden costs and most are incurred at the point of buying. We look at where buyers spend the bulk of their money and offer tips on countering with an opportunity to save cash.
- Solicitor fees: Solicitors help transfer the property into your name and pay out your bank funds at settlement to the seller. You can save money on their service by hiring a convincer rather than a solicitor, they offer a similar service for a lot less. Normally they charge around $950 to $1000 where a solicitor can charge upward of $2000 per transaction.
- Paying too much for property. Real estate agents can drive up the price of a property by tens of thousands of dollars adding years to your mortgage repayments. You can beat a real estate agent at their own game by hiring the service of a buyers agent.
Even though it costs to hire one, a good buyers agent can save you tens of thousands of dollars hence cutting years off your mortgage.
- Setting up your home loan: When setting up your home loan, all the fees are worked into monthly and annual charges over a 30-year period. For those who take the time to compare, the difference in price from one lender to another can add up to thousands.
What is the best way to pick the cheapest mortgage? Use a mortgage broker rather than dealing direct with a bank. The bank pays commission to a broker once the loan is approved so you don’t pay a fee for hiring them. They have access to a range of banks and can offer you 100’s of different packages, which can save you big bucks in the long run.
- Reducing your stamp duty bill: Stamp duty tax is the second biggest expense when buying a house. To save money, consider buying a property off the plan or a block of land. Stamp duty is charged at the value of the property at the time of purchase. Hence, if there’s only a land value to consider, you could save anywhere from $10,000 to $20,000 purchasing an off the plan property.
- Sell your back yard: Some houses have the potential to be subdivided and sold. What this means is keep the property you live in and sell your back yard to a developer or a builder. This could cut your mortgage in half!
- Only buy what you need: Many new car buyers have the intention of buying the basic model when walking into a car dealership. In most cases, buyers walk out spending a lot more money than expected with a top-of-the-range model. Homebuyers tend to do the same thing when buying property. The more you spend, the longer it takes to pay off and the higher your stamp duty bill becomes. Consider smaller property or a small land allotment or purchase a little further from the city.
By Mark Ribarsky
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Mark Ribarsky is the founder of Wise Real Estate Advice and Property Managers Melb. He is a fully qualified real estate agent, Bachelor of Business, residential property developer and commercial buyers agent.
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