5 often-overlooked factors to consider before you enter the property market

Ready to buy a home? There are some important things you should know first.

There's more to buying a house than just choosing a property, paying for it, moving in yourself, or renting it out.

There are lots of considerations and costs that are easy to overlook. But realistically, you need to weigh them up before you proceed. Having a clear understanding of these factors can help you make a more informed decision when you purchase property.

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If you have less than a 20% deposit saved for your new property, you'll probably need to pay lenders' mortgage insurance – sometimes called LMI.

LMI is a type of insurance that's used to protect the lender from risks associated with lending to borrowers, where the deposit is less than 20% of the total property price.

So buyers often think of LMI as just one more cost.

But there's more to LMI than that. When it's used properly, it can actually enable prospective borrowers to buy sooner.

LMI providers like QBE work with a range of different lenders (you can see some of them at the bottom of this page). So you're able to select from a range of different home loan products and get the features you're looking for while benefitting from using LMI.

So what benefits can it offer?

The most obvious advantage is that you're able to cut down on time spent saving and purchase a property sooner.

In turn, you're able to start building equity in that property, which can be used for a range of other purposes down the line – growing an investment portfolio, getting a loan for home renovations or buying a bigger home, to name a few.

Working with LMI providers like QBE can help you get a foot on the property ladder much more quickly.

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2. Conveyancing and legal costs

When you buy or sell a property, you're entering into a binding, legal contract. So it's good to have legal support in your corner to help minimise any risk from the process.

You'll need someone to handle the conveyancing – that is, the legal aspect of the process of a property transfer. Conveyancers are solicitors or qualified, licenced professionals that are experts in the field and can make life much easier for you.

However, this comes at a cost. Specifics will vary depending on the complexity of the contract, but you're generally looking at costs of $700-$2,500.

3. Insurance

Home insurance is essential for homeowners. But it can also be a significant cost for a property owner. Importantly, it will stick with you for the lifetime of the home.

A huge range of factors play into your overall home insurance costs – and not all of them are immediately obvious. So it can be very beneficial to get an insurance estimate on the property before agreeing to a purchase.

The type of insurance you need will vary, depending on the type of property you purchase. For example, if you've purchased a townhouse or unit, you'll need strata insurance via a body corporate.

Different costs will apply depending on your specific situation. However, your conveyancer or solicitor should be able to help you with the process of finding the appropriate insurance for your needs.

4. Strata/body corporate fees

In addition to the purchase price, conveyancing and other fees associated with buying a home, there can be numerous ongoing costs for home ownership.

Maintenance, home insurance, council rates and bills are some of the most common. But if you're purchasing an apartment or townhouse, you shouldn't overlook strata fees – sometimes known as body corporate fees – either.

You can find a more detailed guide to strata fees right here on Finder. But in basic terms, they're an additional fee you pay, usually on a quarterly basis, for maintenance of communal areas of the building you live in.

These can vary quite widely depending on the facilities you live in. For example, an apartment complex with lifts and public features like a pool is probably going to have more expensive strata fees than one that doesn't.

Strata fees can sometimes be offset by other benefits to the owner or tenant, but it's important to be aware of them ahead of time and budget accordingly.

5. Future plans for the property

Buying a property shouldn't just be about what you're doing with it right now. You should also think seriously about what you plan to do with it long-term.

Is it designed to be a "forever home" to fit the family? Is it likely to serve as an investment now, and a place to retire later? Your plans can make a considerable difference to how you gear a property, what sort of entitlements you may be eligible for your tax and even your overall investment strategy.

So before you get into a mortgage that lasts for years – or even decades – it's important to consider factors like starting a family and future portfolio expansion.

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