Revealing the Hidden Expenses of Property Purchases: The Role of a Guarantor

Diving into the property market can feel like embarking on a complex journey. While the property's price tag is the most visible expense, there's an entire iceberg of costs beneath the surface that prospective buyers should be aware of.

As Synergy Business Finance's Director, Brendan Philp, underscores, "Our mission is to provide our clients with a crystal-clear view of the financial landscape when it comes to property acquisitions. Beyond the purchase price, we're mindful of various expenses that can catch buyers off guard."

Beyond the property's purchase price, these are the additional financial considerations:

1. Property Valuation: Before sealing a property deal, a professional valuation is indispensable. It not only determines the property's market worth but also calculates the final loan-to-value ratio. Valuation costs vary depending on factors such as location and property complexity. While many lenders may cover this cost for standard property purchases, it's essential to ascertain if this expense falls on your shoulders.

2. Mortgage Registration: This fee covers the legal registration of your mortgage with the relevant government authority. It's a crucial step to secure the lender's claim on the property in case of borrower default.

3. Stamp Duty: Stamp duty is a substantial expense that fluctuates depending on your property's location and value. This state government-imposed tax applies to property transactions. Seeking guidance from experts can help you decode the applicable stamp duty in your area.

4. Lenders Mortgage Insurance (LMI): LMI may be necessary if you're working with a deposit of less than 20%. While it offers protection to the lender in case of borrower default, it's an additional cost to factor into your budget.

5. Building Inspector: Hiring a building inspector is vital to unearth any concealed defects or structural issues within the property. While it incurs a cost, it provides peace of mind by revealing potential problems before you commit.

6. Conveyancing: Conveyancing involves the legal transfer of property ownership. Engaging a professional conveyancer or solicitor to oversee the legal aspects of the transaction is advisable.

7. Registration of Transfer: This cost covers the legal transfer of ownership from the seller to the buyer, ensuring that the transaction is accurately recorded and safeguarding your ownership rights.

Venturing into the property market requires meticulous planning. Often, securing a loan demands a substantial deposit, which can be challenging when you're balancing rent and other expenses. This is where the option of a guarantor can be a game-changer.

"A guarantor can be a fantastic solution for those without a 20% deposit who want to sidestep the additional cost of LMI," Brendan Philp continues. "If you have a close family member willing to use their property as collateral, it can provide the boost you need to step onto the property ladder."

A guarantor can be your lifeline if:

• You lack a 20% deposit and aim to avoid LMI costs.
• A close family member is open to using their property as collateral.
  
  

Moreover, as your property's equity grows, your guarantor's commitment can be released. If you're seeking insight into the intricacies of this approach or guidance on discussing it with a potential guarantor, our team is here to offer expert assistance.

Contact Synergy Business Finance's team today to gain a comprehensive understanding of this process and explore strategies for broaching this topic with a potential guarantor. Your path to property ownership just got a little clearer.