Buying a property can feel like a daunting task especially when it’s your first home purchase – but it doesn’t have to be. Follow these steps below to ensure you cover all the essentials to buying your new home.
Decided to buy
Great! You have taken a step closer to home ownership. Now you will need to talk to a mortgage broker and see if this dream can be achieved and turned into reality.
Talk to a mortgage broker
By talking to a mortgage broker they will be able to assess your situation and provide specific advice on how much you will be able to borrow after some information has been obtained from you. Unlike going to a bank where you are limited to the best product only they have to offer and generally placing an unnecessary hit on your credit file there will not be the case with a broker. Your chosen broker will find the best solution to suit you and your current situation with your long term goals in mind. If your broker gives you the go ahead the next step is to start researching some properties within your price range.
Search for your new home
It is important to research properties and also talk with your mortgage broker to see if they can provide you with property reports for specific properties. These reports can be a helpful addition to your research process when trying to find the right property in the right suburb for the right price that is suitable to you.
Viewing the property
Found a property that interests you? It will be best to talk with the real estate agent from a desired property and either organise a time to view the property or plan to go to a scheduled open inspection.
Making an offer
If you are happy with a particular property and feel that you have done adequate research then there is no better time to talk to the agent and organise a time to meet and place an offer on the desired property. Don’t be scared to put an offer that you think is fair because the agent will generally come back with a counter offer if the vendor is unhappy. Also if you enquire about a desired property and the agent tells you the place is under contract don’t lose hope because there will be something else out there of interest. Alternatively, if the property is up for auction, prepare to bid at the upcoming auction. Some real estate agents may require a pre-approval to be in place however this is not needed, feel free to click here to read more in our article.
Once your offer is accepted you will then sign the Contract of Sale and the cooling off period will then begin shortly thereafter in which case you would organise any Building Inspections or Pest Inspections to be carried out. A Contract of Sale is a legal document that sets out the terms and conditions of the sale including the agreed upon price and settlement date. At this point you will then notify your broker and provide them with a signed Contract of Sale and the loan application process can now be started. The agent will generally give 14-21 days for finance to be approved and written confirmation from your broker along with 30-45 days for settlement.
Find a conveyancer
Even though you can do the legal work yourself with DIY kits available this is not recommended for most buyers, particularly First Home Buyers. It’s a far better idea to employ the services of a professional conveyancer. Ask for a quote first, and compare prices. Conveyancers charge a fee that is calculated per job. Your conveyancer will look at the contract, discuss the terms and conditions and ensure the relevant searches are carried out. During the cooling off period, you/your conveyancer can negotiate any changes to the contract and ensure amendments reflect agreed changes. Read more here about the role a Conveyancer plays in the buying and selling process.
Time to organise insurance
Once you have reached this point it is important that even though you haven’t yet taken ownership of the property that you have insurance on the property – Insurance companies are familiar with this part of the process when buying a home and it is important to have building insurance in place. Read more here about the importance of having Building Insurance in place.
Loan application process
By this time of the process your broker will have the home loan application process started with the chosen/agreed upon lender. Your broker will contact you to obtain the necessary information needed to get the process started. Your broker should update you on any changes/updates with the lender on how the progress is tracking with the application.
Everything will start to fall into place at this point and the lender will have assessed your application and approve your loan conditionally (otherwise known as Conditional Approval). This is not out of the ordinary that your broker may receive instruction from the lender to request some more information from you clarify any questions or queries a lender may have. Once the requested information has been received by the lender they may take anywhere up to 3 business days (depending on current work load) to assess the information provided and move it to the Unconditional Approval (Formal Approval) stage.
Great news, your broker will update you with the fantastic news that your loan is now Formally Approved with no more conditions needed and the loan documents will then be sent out within 5 business days from the lender. When the loan documents have been completed by you and sent back to the lender, once the team receives the documents and is able to verify them they will then proceed to talk with your conveyancer and organise a time for the desired settlement date.
The date of settlement is when you officially take legal ownership of the property. The balance of the purchase price has to be paid on this day. The balance of the property price will be handed over to the vendor’s conveyancer in return for the title of ownership. You’ll need to arrange to collect the keys from the agent. A good tip is to change your locks because you don’t know who might have a key to the property and this will provide peace of mind for you and your precious belongings. Now the property is really yours and all of your hard work is starting to pay off.
Time to move in
Now is a great time to see who your real friends and family actually are! You can either hire a removalist but if you are a FHBer it would probably be best to call on the favours of close friends and family as they will be more than happy to help you into your own home.
Once you are moved in
A home loan will be the biggest debt you’ll ever have so it makes sense to try to pay it off as quickly as you can. Once you are moved in and settled it will be good to assess your home loan repayments because one of the best ways to pay off your mortgage sooner is to make weekly or fortnightly repayments rather than monthly. This means you make an extra repayment a year, reducing the term of the loan if you do not redraw the additional funds. If interest rates go down at any stage it will be best to leave your repayment at the same amount as this will generally help repay your mortgage faster.
If you would like to have a discussion about your lending structure and the options available to you, don’t hesitate to get in touch with your mortgage broker Gerry today to get an in depth review and advice around your options available to you.