It’s best to start your search with a clear picture of what you want – property type, level of accommodation, proximity to work, public transport or schools, a quiet or bustling neighbourhood/location.
Once you have focussed on an area consider the next level of requirement. These include but are not limited to:
- Loan set up costs
- Property orientation
- Ventilation and sub floor air flows
- Flexible layout and building structure
- Existing character and construction integrity
- Neighbourhood, community and surrounds
Determine Your Budget
Most banks will usually lend up to 90%* of the value of the property, so you could get started with as little as 10% of the purchase price.
You’ll need to take into account the other costs associated with buying a house:
- Loan set up costs
- Conveyancing/legal fees
- Stamp duty
Stamp duty is the largest expense after your mortgage. Stamp duty is payable on both the purchase price of the property you are buying and the amount you borrow for your home loan.
If you are borrowing more than 80% of the value of your property, you will need Lender’s Mortgage Insurance. Lender’s mortgage insurance is usually charged as a one-off premium and is calculated on a sliding scale. That is, the greater the percentage of the property value you borrow and the more money you borrow, the higher the mortgage insurance premium payable.
Property Inspections and Legal Advice
Buying a property is probably the biggest purchase you’ll make in your life, so it pays to do your research. After all, you don’t want to suddenly discover once you’ve moved in that your new home has pest issues or building problems.
Covers the condition of the building and identifies any potential problems including cracks, rising damp, structural movement or inadequate plumbing.
Include difficult areas under floors or on roofs to pick up any termite or pest infestation.
It’s good idea to engage a solicitor or conveyancer. They will take care of the legal side of buying a home. Fees will vary and it is wise to shop around. The cost will depend on the type of title the property is registered as, and also how much time and work is required. Call several solicitors or conveyancers to get quotes. Conveyancing can include strata title searches, council building certificates, drainage diagrams and documents from the State Traffic Authority and Water Board. In addition, they will handle the exchange of contracts during settlement.
Make an Offer
If you’ve found the perfect property you’re ready to make an offer. There are generally two scenarios regarding of offer – unconditional and conditional offers.
An unconditional offer for a home means the buyer is not placing any conditions on the purchase. The seller has only to accept the buyer’s offer and the home has been bought.
A conditional offer means the buyer has placed one or more conditions on the purchase, such as ‘subject to finance’ or ‘subject to sale’. Until all the conditions have been satisfactorily discharged, the sale is not completed.
The best offer is always the unconditional offer. An unconditional offer is considered more readily by the seller. In some cases a conditional offer can be rejected, if for example the seller receives what they considered to be a better offer while you are trying to make your mortgage arrangements or sell your property.
An outright offer to buy a property. You should be 100% sure that this is the property you want and that you have access to the money to buy the property. Once the auctioneer/ vendor has accepted your offer, you are legally obliged to go through with the sale.
Where an offer to purchase the property is presented to the vendor/seller. Upon negotiation and acceptance the purchaser instructs his or her solicitor/conveyancer to exchange contracts.
There are two copies of contract of sale – one for you and one for the seller. Both parties sign both copies before the contract is ‘exchanged’. This occurs when the deposit monies is paid.
Paying Your Deposit
If you are buying at an auction, you are required to pay a deposit on the day of auction. If the sale is by private treaty (For Sale) with a sale price you will pay the deposit monies at the time of exchange of contracts.
Your financial institution will arrange a valuation of the property you are intending to purchase. This will provide them with an independent valuation of what the property is worth, which is used to calculate mortgage insurance is required and what percentage of the property value you are borrowing.
The date of settlement is the date you take legal ownership of the property. The balance of the purchase price must be paid on this day. Settlement is usually 6 weeks (42 days in NSW) and can be negotiated as part of the contract of sale documentation.
What happens during settlement?
- Your solicitor/conveyancer will prepare and arrange for you to sign a Transfer of Land document. They will register it at the State/Territory Title’s Office on your behalf. Upon registration the property will be changed over to your name.
- Your solicitor/conveyancer will contact your financial institution, the seller’s solicitor/ conveyancer, and other interested parties to arrange the date, place and time of settlement.
- Your solicitor/conveyancer should advise you one week prior to the settlement of the exact date, time of settlement and the amount of funds that you are required to provide prior to settlement (if applicable). This amount is usually required to be paid by bank cheque one day before settlement.
- After settlement has taken place the vendor’s solicitors will contact the real estate agent who sold you the property and advise them to hand over the keys of the property to you.
- Your solicitor should contact you and confirm settlement has taken place. They will also send you a Statement of Adjustment to show you how the funds have been disbursed to the parties involved.