Different Costs involved in buying a property
There can be various types of costs involved in buying a property, the following
details some of them which you should be aware of.
Mortgage: This is offcourse the biggest cost involved in buying the property.
This is also a ongoing cost, as you have to pay interest on this amount &
probably the principal amount back your lender on agreed or monthly basis.
Lenders Mortgage Insurance: In most cases when you borrow around 80 percent or
over the value of property, the lender will want this insurance to cover the
lender in the event you default on the loan and the outstanding amount of you
loan is greater than the resale value of the property.
Stamp Duty: is basically the tax that is imposed on mortgage. There can be two
types, stamp duty on amount borrowed and stamp duty on property purchase. Each
can vary depending on where you live.
Negative Gearing: is a situation where you borrow money to buy the property, the
income generated from it in form of rent etc does not cover the interest on the
loan. This of course does not affect every property but can happen there are too
many fluctuations in the market trend.
There can also be additional charges like legal fees, lender fees etc, all
depending upon one’s circumstances.