SIMPLE GUIDE FOR BUYERS
- Property Inspections
- How Buying Process Works
You need to ensure you have a minimum of 10% of the purchase price of the property as the banks and lenders prefer to lend up to 90% as a maximum. Proof of genuine savings over a 6 month period will also assist you in your process with your lender / bank. This will also save you money in the long run as it will decrease the amount of interest that will eventually be paid on your home loan.
Depending on the total amount you as a borrower request some lenders may require you to carry mortgage insurance. Mortgage insurance protects you against any loss if you default on your loan and you typically wear the cost of the mortgage insurance for the lender.
The most important thing to consider is the current interest rates, research the current interest rates and take into account the fact that if the rates increase once your loan has started can you afford the repayments, ensure you have contingency funds available if you do not fix your home loan rate as you may be able to afford the payments when you are on variable and the rates are low but as rates are set by the RBA each month they can quickly increase over a 12 month period.
Cost Of Buying
The cost of purchasing a property will be fees and charges over and above the purchase price, so these costs cannot come out of the funds you borrow from the bank for the property, you will have to have these funds available straight away. Fees and charges include:
- Loan establishment fees
- Bank charges
- Legal fees & searches
- Stamp duty / transfer duties (click here for more information: www.osr.qld.gov.au/duties/transfer-duty/index.shtml )
- Insurance premiums
- Building & Pest Inspection Reports
Get Professional Advice
Ensure you speak to your financier or mortgage broker before you start looking at properties so that you know your limits
When looking at houses to buy or any other property for that matter, make sure you do your research!
From the myriad of factors that determine a property’s price potential, location (specifically proximity to community services, and availability of facilities and infrastructure) seems to hold firm as the perennial key to future capital growth.
Schools, shopping centres, public transport, parks and, increasingly, cafes and restaurants, are all desirable aspects of suburban living and favourable attributes to potential property buyers.
From the majority of buyers’ viewpoints, the most important features for the location of their home are:
- The safety of the neighbourhood, and whether it is close to
- Medical services
- Their workplace or reliable public transport.
Some things to consider and look for when inspecting a property are:
Inside the Property
- Check for signs of rising damp, such as rotting carpet or mould on the walls and ceiling;
- Check the walls and ceilings for warps, cracks and any obvious damage;
- Test all light switches; and
- Test the water pressure in hot and cold taps and check to see that water drains well – slow flowing water may indicate blocked drains.
Outside the Property
- When attending an open house, a buyer will often be asked by the agent to provide their contact details. Agents are required under the National Privacy Act to have available for perusal a copy of their privacy disclosure, outlining how they collect, use and store any personal information that is obtained through such registers. Inspect fences for stability and any obvious faults;
- Large trees around the house may have large root systems that can cause structural problems;
- Check that the land’s water run-off is adequate and drains away from the dwelling;
- Water staining on the eaves may indicate damaged or blocked gutters;
- Look at the roof for any broken tiles or capping; and
- If the property has a pool, check the legality of its fencing via the Pool Safety Council. Pools in a Community Titles Scheme (body corporate) are the responsibility of the body corporate.
HOW THE BUYING PROCESS WORKS
Before you intend on makeing an offer, make sure you have organised the following first:
- Pre-approval of finance from your bank or lending institution
- Choose your preferred solicitor or conveyance clerk
- Ensure you have your initial and balance deposits ready, if purchasing a property through auction you will need the full 10% deposit on the day of the auction
- Keep in mind a preferred settlement date, normal contracts in Queensland are 30 day contracts, so this doesn’t give you much time to get organised!
- Do you need to sell your property? Do you need to find a place to rent while you are still looking?
Once you found the property you love then you need to ensure you understand the steps involved in securing the property. It is essential you obtain Independent legal advice from a solicitor or conveyancing clerk. You should also seek an independent valuation of the property, you may find that your bank or finance institute will arrange this for you.
Cooling Off Period
The cooling off period is the first 5 Business day period which starts when the property is Under Contract. This is where the purchaser can terminate the contract for any reason, but will need to pay a termination penalty equal to 0.25% of the purchase price.
The initial deposit is payable within 24 hours when both the buyer and seller has signed the contract and agreed on the terms and conditions of the written contract. If purchasing by auction you will need the intire 10% deposit on the day of the auction.
Balance of Deposit
The balance of deposit is payable when the finance clause is due (if applicable) this is also known as the unconditional date. It is standard practive for the total of deposits to make up 10% of the purchase price, however this can be negotiated. Remember if you are purchasing by auction this would be due on the day of the auction as mentioned above.
Building & Pest Inspection
A building and pest inspection can be arranged but it is up to you as the purchaser to arrange and pay for, The standard time frame is 7-14 days after both parties (purchaser & vendor) have agreed and signed a written contract.
A valuation request by your bank or lending institution may be required, this is normal practice in all states of Australia especially if you’re borrowing more than 80% of the purchase price of the property. The Valuation Inspection will be arranged by your bank/lending institution within 14 days of the dated contract.