Buying a
home is often a life-changing experience. Finding the right home, getting the
right loan and moving are all stressful. Your home is often the largest
personal investment you will ever make, so you want to ensure all your
decisions are the correct ones.
Processes in Buying Your Home:
The
following are a list of steps to consider when buying a home and applying for a
loan.
·
Applying for a loan: Submit a formal application for a
loan to your lender as soon as possible. You should not engage in contracts for
the property, even with a cooling-off period, until finance has been approved
formally in writing.
·
The property:
If you pay an initial or part deposit on the property, this payment does not
bind you or the seller unless signed contracts have been exchanged. It is
refundable for a change of mind however to secure the property a deposit must
be paid and contracts be traded through a solicitor or conveyancer.
·
Inspection of the property: It is strongly advised to arrange inspections of the
property before exchanging contracts. Inspections are precautionary measures
implemented to ensure the property is structurally safe and free of pests.
Strata inspections are recommended for strata property.
·
Exchange of contracts: Once the property has been inspected, the surveys are
completed to your satisfaction and your loan has been approved, your solicitor
or conveyancer will organize the exchange of
contracts.
·
Deposit:
Upon the exchange of the contracts, the buyer must pay the deposit stated in
the contract. The amount is usually 10% but this may vary depending on the
terms and conditions of the contract. The deposit is paid to your real estate
agent and is usually held in the agents trust account. It usually takes three
to six weeks to settle after the exchange of contracts.
·
Final check:
On the settlement date, your lender and solicitor or conveyancer
will check the title one last time to ensure the property is clear from any
interest or restrictions that may have been recorded between the exchange date
and the date of settlement.
·
Settlement:
On the settlement date the lender pays the loan amount minus costs and
disbursements such as settlement fees, expenses incurred and insurance costs.
You, the buyer will also be responsible to pay any adjustments such as taxes,
council rates and water rates. The title deed and mortgage will be held by the
lender until the loan is repaid.
·
Insurance:
Once settled and the property becomes yours, you are responsible for insurance.
The Buying Process:
Use the
following checklist to make sure you go through all the right steps when buying
a property:
|
1
|
Get an
independent valuation
|
|
2
|
Inspect
the contract of sale
|
|
3
|
Check
which fixtures are included in the sale
|
|
4
|
Get your
solicitor or conveyancer to check the contract
|
|
5
|
Put in
an offer subject to special conditions like finance or building and pest
inspections
|
|
6
|
Conduct
all necessary inspections as well as title searches (If not supplied by the
vendor)
|
|
7
|
Arrange
final finance approval
|
|
8
|
Check
the cooling off period
|
|
9
|
Exchange
contracts
|
|
10
|
Pay a 10
per cent deposit
|
|
11
|
Arrange conveyancing and transfer of title
|
|
12
|
Pay the
balance of the sale price on settlement day and get the keys
|
Source:
YMM, June 2004, page 64.
Areas
requiring special attention:
As simple
as the process may seem there are areas that can be daunting and overwhelming
without an adequate understanding of them. There are problem areas in buying a
home and these areas are identified and addressed in the below section. These
outlines should only be used as a guide and prior to making any decision you
should consult your solicitor or conveyancer
Other
areas that should be paid special attention include:
·
Imagine the property is vacant: Do not be swayed by beautiful furniture, it leaves with
the owner. Consider your furniture and belongings and imagine them in the home.
Do they work? If not, maybe the home is not for you.
·
Condition of the home: Buying a home needing major repairs can be a costly
venture so ensure you have the necessary funds for renovation or you could find
yourself living in a half finished home for an extended period of time. Make
sure the purchase price is adjusted to reflect the costs of renovations.
·
Purchase at an affordable level: Carefully consider your income and living expenses
as well as future plans such as marriage and children. Remember your dream home
is not worth sacrificing your entire future for. Budget interest rates to be at
a two per cent higher level than they are now and see if you can still afford
the payments, this is a good indicator to examine whether the home is
affordable.
·
Consider all costs and expenses before you sign: Expenses such as tax, insurance,
maintenance, council and strata fees should all be taken into consideration.
·
Do a pre-settlement inspection: Visit the property prior to settlement, once all the
furniture has been removed to ensure there are no nasty surprises. Any breakages
and damage should be identified and resolved prior to settlement.
·
Ensure everything is in writing: All promises and discussions are to be in writing,
do not make any assumptions or believe any assurances. Keeping an ongoing log
book can be a worthwhile exercise.
Last
words of Wisdom…….
·
Do your research:
Ensure
your research is done before spontaneously investing years of hard earned money
into the first available place. Doing so may see all your savings deteriorate
in unexpected costs and expenses. Inspect as many properties as possible and
attend as many open houses as you can. This is time well spent, as you will
develop a comprehensive understanding of what you want from your house. If time
is against you, a professional buyers’ agent can search the market for you.
·
Look for finance:
You should
not be looking for a home without finance so it is strongly suggested you get
pre-approved for a loan before looking a prospective properties. This ensures
that you are not left filling out paperwork only to discover another buyer who
had their loan pre-approved has swept your dream out from underneath you.
Getting your loan pre-approved acts as an advantage as it allows you to place a
deposit promptly, ensuring you get your desired home.
