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When buying a property whether it's your first home or an investment property you will need to decide on what type of property it is going to be and how much you are willing to pay for it, please refer to Property buying process and How much can I borrow calculator.

Looking at your life style needs is also a good indicator such as maintaining a garden, having pets, entertaining and children all represent different needs.

Your choice when buying a residential property will range from the following options:

  • House
  • Apartment
  • Town house or Villa
  • Building your own home.
Buying a house

Houses are generally more expensive than other types of residential accommodation. Houses have higher land content and hence, over time will provide a greater opportunity for capital growth. Established houses that are situated in close proximity to amenities will always be in high demand.

Houses are more popular for families that have young children and need the additional living space with a garden and a garage. However, houses also have higher maintenance costs when compared to other types of properties such as painting, lawn mowing, fences, carpets, up-keeping of gardens and landscaping and other on-going general repairs.

You will also be liable for council and water rates and in some instances land tax. These costs depend on the size of the land the location and the value of the house. Make sure that the property is in good condition as major repairs can be very costly. Sometimes vendors may go through a lot of trouble just hiding faults or providing a quick fix to what could turn out to be a major renovation nightmare for you!

Remember, conducting renovations on an existing house will be more expensive than erecting new structures as you need to work with existing walls or demolish established structures in order to add extensions such as the second bathroom or make the kitchen a little larger or adding the extra bedroom and you will also need to budget for the removal of debris.

It is always important to have all the necessary building and inspection reports done prior to purchasing the property.

Buying an apartment

Apartments are perhaps more attractive for investment purposes as they are less expensive than a houses and generally have higher yields. They contain less land content. Apartments are also easier to rent especially if it is situated in areas close to amenities and town infrastructure. Tenants are also willing to pay good rent if the apartment has a good view with a garage or off-street parking and with good natural lighting will be more appealing. If you are single or a couple with no children you might like the idea of keeping a low maintenance property. If security is important to you, then buying into a building with security will give you peace of mind.

Always try to buy into a small apartment block (low density living) with a pleasant outlook to attract tenants it may also help to obtain finance as banks are more reluctant lending in large complexes (high density living).

When ever you purchase an apartment on strata title you will be liable to pay for the strata levies. Generally new developments that include swimming pools, gymnasiums, saunas, elevators, security systems and landscaped gardens offer very good lifestyles, however quarterly ongoing strata levies will be very high.

Buying in a good area will make sure that your property is always in demand. Since apartments are generally cheaper than houses your loan repayments will be smaller and your buying costs also lower, please refer to Borrowing costs calculator.

Buying a Town House or Villa

Town houses and Villas are generally also cheaper than houses provide the low maintenance aspect of an apartment with added small private land content and a garage. These features are only offered in a house. Town houses or Vilas may also meet with the needs of a growing family. These types of buildings are usually situated near shopping areas and amenities. They represent good value when compared to purchasing a house.

Building your own home

You may want to build a home with your own individual design with a particular attention to a custom made kitchen and bathrooms to landscapes, swimming pool this has a very strong appeal for many home buyers.

Buying land in a good location is very important for long term capital growth and re-sale value. A construction home loan is required to complete the building of your home, please refer to my home loan type guide. The difference using a construction loan is that the full loan amount is usually drawn down over five stages. The licensed builder will receive a series of payments through out the course of construction. The following are the standard five progress payments stages made during the construction process:

  1. Initial stage - completion of foundations state
  2. Frame stage - completion of the framing and roofing state
  3. Lock-up stage - completion of building to lock up state
  4. Fixing stage - Internal walls, kitchen, cupboards, bathrooms, tiling etc
  5. Completion - painting, appliances such as stoves, cook-tops etc

The bank will usually instruct a valuer to inspect the progress of your building at the end of each stage to make sure that the builder has completed the work in compliance to plans and council regulations. You are usually charged by the bank for each time that the valuer inspects the building progress.

The above stages and the number of inspection may differ depending on your chosen lender.

At the completion stage the certificate of occupancy will be issued, at this point you will be able to collect your keys and move in!

Building your own home provides you with some options to consider such as:

  • Using a custom builder - Building your home to your particular design
  • Buying a house and land package from various developers in the market. As generally project homes are cheaper.
  • Owner builder - Most all banks will require for the construction to be undertaken by a licensed builder.
Before you start construction you must lodge your home building plans and application to your local council for approval and consent build. Before you sign any contract with a builder or developer, try to obtain at least three quotes in writing to cover all applicable items such brand and type of fixtures and tasks such as removal of rubbish.

Always make sure that your builder if fully licensed with the relevant building authorities.

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