Many people think that buying a private property just requires you to pay the amount stipulated on the price tag. However, how is this cost broken down?
- Option Fee
In order to secure your Option to Purchase (OTP) so that the seller is obliged to sell, or make the property available for you to purchase, you are required to pay a fee of around 1% of the agreed property price. You can treat this as the first step to owning your private property. Upon paying this option fee, you can still choose not to purchase the property. However, this means that you will forfeit your option fee. As such, think twice before securing your Option to Purchase (OTP).
- Option Exercise Fee
Now that you have paid the option fee, you will be required to pay an option exercise fee when you have sorted out your finances and are ready to exercise your option to purchase the private property. The cost of the option exercise fee is not fixed and usually varies between 5% and 10% of the agreed purchase price (minus the option fee).
- Down Payment
The amount for your down payment depends on how much your mortgage loan is. Usually, whatever that is not loaned will be the amount for your down payment. This amount will have to be paid in cash and is calculated after taking into account your mortgage loan as well as the amount paid for the option exercise fee.
Want to know how to maximise the amount you can loan or what other fees are involved when purchasing a private property? Contact us to find out more.