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Notes
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1
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Conduct analysis at year end of
what years. For example, 7 means after 7 years.
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2
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The ROI rate is used to
calculate the money you could possibly earn if you invest the difference
between your total buying costs and rental payments and assumes that you are
earning this rate on your investments.
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3
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When you buy land in any state
of Australia, which may include buildings, you are liable to pay stamp duty
to the government. The amount varies between each state.
The stamp duty payable, is based on the market value of the property or the
purchase price, whichever is the greater. Exemptions and concessions may
apply in some circumstances. Check with your solicitor / conveyancer to see
if you are eligible.
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4
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Mortgage documents taken in
Australia attract stamp duty to make them legal documents. This stamp duty is
usually paid to the applicable state authority on your behalf by your lender.
In some states this duty does not apply if you are refinancing. The amount
payable is determined by the size of the loan and varies in each state.
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5
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Whenever a property changes
hands, a document known as a Transfer of Land is lodged and registered with
the appropriate State Titles Office. This document records the change of
ownership. The cost to register the title varies in each State / Territory. Your
solicitor / conveyancer will usually perform this task on your behalf.
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6
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Mortgage documents taken in
Australia attract stamp duty to make them legal documents. This stamp duty is
usually paid to the applicable state authority on your behalf by your lender.
In some states this duty does not apply if you are refinancing. The amount
payable is determined by the size of the loan and varies in each state.
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7
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Whenever a property changes
ownership or is refinanced, a search of the Certificate of Title is obtained
from the Titles Office. This is to check if there are any encumbrances on the
title (an encumbrance would include things like mortgages, caveats, restrictive
covenants etc.). This search is also used to check that the details on the
Certificate of Title are correct. The cost of the search varies in each
State/Territory and is usually paid on your behalf by your solicitor /
conveyancer or your lender.
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8
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The amount depends on the
purchase price and the amount you borrow. It protects the lender only and is
normally charged if you borrow more than 80 percent of the purchase price.
Around 2-3% of your loan amount.
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9
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The amount depends on the
purchase price and the amount you borrow. It protects the lender only and is
normally charged if you borrow more than 80 percent of the purchase price.
Around 2-3% of your loan amount.
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10
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If Government Grants (Once Off)
can cover Government Fees (Once Off), Lenders Fees (Once Off), and Buying
Cost (Once Off), you have surplus funds which can be used as deposit so it
will reduce the Mortgage Loan Amount.
If Government Grants (Once Off) CANNOT cover Government Fees (Once Off),
Lenders Fees (Once Off), and Buying Cost (Once Off), you are short of funds
which means you need either find more cash or borrow more to cover the
shortage.
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11
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Repairing, replacing and
renovating costs etc.
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12
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Total Payments (Buy) - Total
Payments (Rent).
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13
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If you choose renting, the
Initial Cash Outlay for buying will be your cash on hand.
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14
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Total Payments (Buy) - Total
Payments (Rent).
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15
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If you choose renting, the
Initial Cash Outlay for buying will be your cash on hand.
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Assumptions
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There are a number of assumptions which the calculation is based
on and they include:
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1
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Unless otherwise stated, all
the fees are annual fees.
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2
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The return on the investors
investment is calculated yearly, hence it is compounding yearly.
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3
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The difference between the
onging owning costs (i.e. the loan repayment and onging holding cost) and
ongoing renting cost (i.e. rent) is added to the renters investments yearly
at the beginning of next year.
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4
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Monthly mortgage repayment is
assumed to include both principal and interest.
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5
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Ongoing Holding Cost is assumed
to be quarterly payment made at the beginning of each quarter when
calculating the NPV.
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6
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The calculator does not take
into account the tax implications of buying vs. renting a property.
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