Home Buying Tips- How to Make It Simple!
Buying a home can be an exciting and nerve-wracking time. Most people will only go through the process a couple of times in their life and it can feel overwhelming. These tips will walk you through the major milestones and show you how to make the process as easy as possible.
- Get Pre-Approved Before You Start House Hunting
One of the easiest ways to make the home buying process as quick and easy as possible is to ensure you have organised home loan pre-approval before you seriously begin looking at homes.
Consider talking to a mortgage broker to assist you, as they will be able to compare the options in the market for you and understand what the lenders and banks are looking for in an applicant. Not all lenders are equal- some will offer fully assessed pre-approval, while others may not have this available. They can also assist you in the negotiation on the property.
For a fully assessed pre-approval, the bank will review your income documents, statements, credit file, savings history and more. If their criteria are met, the lender will conditionally approve your home loan application, usually subject to:
- You finding the property you would like to purchase
- Providing an executed contract of sale for the property
- A satisfactory valuation being completed on the property
- You having sufficient savings to complete the purchase
Now that you hold pre-approval, you can start looking at properties and negotiating with agents!
- Making an Offer on a Property
Once you’ve found a property you’re interested in, it’s time to make an offer. Understanding what the clauses and terms to put on your offer is a very important part of negotiating on a property.
Common items are:
- Initial and Balance Deposit- this is how much deposit you will pay on the property. Initial deposit is generally a smaller amount ($1,000 to $5,000) paid within 1-2 days of the contract being signed. The balance deposit is usually be a larger amount paid at a later date (often once the contract is unconditional and all clauses are satisfied).
- Finance Clause- Putting a finance clause on your offer makes it ‘subject to finance approval’. This clause means that if you are unable to obtain finance approval, you can exit the contract without penalty and get your deposit back
- Building and Pest Clause- this clause is similar to the finance clause in how it works. A building and pest inspector of your choice will inspect the property (at your cost) and if there are substantial structural issues with the property, you can look to exit the contract without penalty and get your deposit back
- Settlement date- this is the date at which the property will officially change hands and be transferred into your name. A timeframe of 30-45 days is quite standard, though you can look to extend this if the seller would prefer this.
- My Offer Was Accepted- What Now?
Get Your Conveyancer Involved
Your conveyancer will need a copy of the contract and it is not uncommon to engage a conveyancer before you actually sign the purchase contract. They can review the contract to ensure it is composed appropriately and contains all the right clauses and terms.
Your conveyancer will act as your agent in the transaction- handling the legal paperwork, conducting searches on the property and preparing the transfer of the title into your name. Once all the paperwork is finalised, your conveyancer will book the settlement and either attend in person or manage the booking in the digital settlement platform PEXA.
Take Out Building Insurance on the Property (if required)
If the property you have purchased is a freestanding house, you will need to take out building insurance. Depending on the state, you may even be liable for the property immediately. Your conveyancer can be consulted to confirm exactly when you should take out cover, but your finance provider will almost certainly require you to maintain insurance on the property before settlement as a minimum.
If the property you are buying is strata titled (has a body corporate) then often the building insurance for the property will be covered by body corporate insurance. Your mortgage broker and conveyancer will need a copy of this document, which the seller will provide you.
Get Your Finance Approval Finalised as a Priority
Assuming you are pre-approved, the process to finalise your formal (or unconditional) approval can be a relatively quick one.
That being said, it is important to get the required documents to your mortgage broker as a priority, as sometimes there can be unexpected delays with valuations, lender processing times, contract changes and more. Your mortgage broker will generally need the fully signed purchase contract, at which point they will order the valuation on the property and finalise the finance approval.
Failure to get your finance approval organised in time can result in penalties, loss of your deposit or the property contract being voided, meaning you may miss out on the property.
Once your finance approval is held, your chosen lender will issue the loan documents and your mortgage broker can step you through the signing of these and answer any questions you may have regarding the documents.
- Settlement Day
With all of the above organised, your lender will certify your loan documents and your conveyancer will be notified that settlement can be booked. You will be provided with a draft settlement statement which will include the expected costs and show how the funds will be paid out at settlement. Your conveyancer will confirm once settlement has been successfully completed and you can get the keys for your new home!
If you’re a home buyer looking to get started on your home buying journey and would like to talk with a mortgage broker, reach out to SimpliFi Lending today for an obligation free chat.
SimpliFi Lending- Mortgage Broker Brisbane
) 0411 601 328
