Purchasing a property is a big decision for most people. In fact, for most people it is the single biggest transaction they will ever be a party to. And because it is the biggest transaction it also potentially carries the greatest risk.
Whilst you should enjoy the process of purchasing your new home or investment property, you must not lose sight of the potential for loss if things don’t end up being as they seem.
Approaching your purchase in a methodical, logical manner, is the best way to ensure you maximise the return on one of your most financial important investments.
There comes a time for all of us to decide whether we will rent a property to live in or buy a property to live in. And either way it’s a big decision.
Making the decision to buy can be a complex one to make. After all, the average homeowner will sign up for a mortgage of 25 years or more. That is a massive financial decision and will have some impact on almost every other financial decision you make.
It’s important to determine your capacity to repay a loan, without adversely impacting your other needs in life, whilst factoring in some space for the sorts of curve balls life will throw at you.
Your capacity for loan repayment will determine the maximum loan amount you can service.
In the property game there is a saying “location, location, location”. Perhaps you’ve heard of it. But we think there’s another saying which is just as important “research, research, research”.
Buying a new home is an emotionally charged thing. But thinking about all of the memories your family will make there in the future can get in the way of good decision making. And this is definitely one decision you should not make on emotion alone.
Do your research. Research prices, suburbs, schools, access to transport, future plans for development in the area, best streets. Is now the best time to buy? What are interest rates doing?
The simple message is do your homework.
Before you start your property search in earnest it is best to see your finance provider to assess your capacity to borrow funds and arrange for finance.
It is not uncommon for house hunters to miss out on their dream home because someone else had already secured finance and they didn’t. House hunting without finance preapproved is kind of like being in a prize fight with one arm tied behind your back.
Speak to your bank, credit union or finance broker and secure the best finance arrangement for your individual needs. That way you’ll be armed and ready when you’re ready to make an offer.
Search & Select
Armed with your research and your pre-approved finance it’s time to get active in the buying process. You’ll likely have already identified a number of properties which match your selection criteria.
Then it’s up to you.
We can’t offer you much advice at this point, except it’s often better to make no decision than to make a bad decision. If the properties on your short-list aren’t ticking enough of the boxes, keep searching.
If you’ve found your dream property then it’s time to make an offer.
Having found the ideal property you might feel like it’s time to make an offer. But before you do there’s a few things you should cover off on.
Firstly, you should review the contract. The vendor (seller of the property) must have a contract prepared and available for inspection by potential buyers. The contract should include a council zoning certificate, the registered property title and the details of other registered interests over the property.
Review the contract carefully with your King Cain property expert before signing to ensure you’re protected. This is the start of the conveyancing process.
At this point you may also wish to commission property and pest inspections, just to make sure there are no unpleasant surprises once this hot property is all yours.
Make an Offer
If the contract looks ok and the property and pest inspections don’t throw up any concerns, and you want to proceed, it’s time to make an offer.
The offer will need to be made to the agent, where one has been engaged to sell the property, or direct with the seller.
Any offer will include the amount you’re willing to pay and specify any conditions of the sale, such as deposit amounts, time of settlement and any repairs which are required before settlement.
We can help you put a letter of offer together to ensure the agreement captures the conditions of your offer.
Negotiate & Exchange Contracts
After an offer is made on a property it is quite normal that your first offer won’t be accepted and there’ll be some negotiation required to get to the final agreement.
Be aware that whilst you are negotiating the vendor may be in negotiations with other interested parties. They may even exchange contracts with someone else. If you’re using an agent they will probably advise you that others are in negotiations, but nothing is binding until contracts are exchanged.
Once you have reached agreement you’ll need to sign and exchange the contracts. You’ll also be required to pay the deposit amount specified in the contract at the expiration of the cooling off period.
You can withdraw from the sale during the cooling off period, but you may forfeit your holding deposit if you do so.
Following the exchange of contracts, settlement will usually take place in 4 to 6 weeks. The exact timeframe will be specified in the contract.
On settlement the balance of the amount you owe on the property will be payable to the vendor. You will also be required to pay stamp duty on the property unless you qualify for a stamp duty exemption or reduction.
Once settlement is complete you’ll be handed your new keys and there’s nothing else to do but move in.