Deciding to buy a property, whether it be your first home or an investment property is a major investment. This action is one of the most important decisions of your life with many factors to carefully consider, such as location, size, return on investment, style, deposit amount, renovation cost and much more.
You need to balance all of these considerations as well as know the current property market and bank interest rate trends to fully decide on what property you buy and to when to purchase it.
Select Legal are happy to assist with all details within the process, and are listing below some of the key points of consideration.
Before you enter into this major decision you must be ready to commit to the purchase. The best way to be ready is to ensure you have done extensive research. You must be absolutely ready and know that this is the time for you to proceed. Balance you finances and your expenses to ascertain the viability. If it is your time then proceed with caution with the following guidelines.
The Melbourne/Victorian property market has experienced some ups and downs over the last decade. In recent times, however, the housing market has seen a significant decrease in demand after the huge increase in demand at the start of the Covid period. This has led to a stabilising of house prices in Melbourne. Of course the house market will bounce back when interest rates level out, and the prediction is that from mid 2023 or the start of 2024 that the market will increase again.
Purchasing a home without proper planning can be costly. Take your time and don’t jump into any impulse purchases. Start looking for a place at least 6 months before, as the peak of the market often has high prices and many buyers who may be competing with you.
You can save money by shopping around before you make an offer on your dream house. Here’s how:
Look into what comparable residences have transacted for in the area. Utilize online real estate websites which reveal recent transactions’ data concerning residences like yours. Furthermore, they provide information regarding active listings and recently sold properties in the area.
Your priorities will vary depending on whether you are an investor, family or young single or couple. Consider making a checklist of all your non-negotiable, “must have” requirements. Here is a list for wannabe homeowners to work from:
To find out where you can afford to buy, you can research property prices, and there is plenty of existing property market data to help you quickly find the median price of an area you are interested in.
Figuring out what type of property is right for you:
You need to balance what is happening in your life at the time, assess whether you have the job security that financiers will need to enable the purchase. High job security will give lenders more confidence in you and will give you a better chance of proceeding.
At the very least you should be checking your credit file status to ensure there are no impediments within your past that could preclude you from obtaining a loan. If you have bad credit, it might not be the best time for you to purchase a home or investment property. If you have multiple credit cards and loans to pay off, minimise these as much as possible. Reducing your limit on your cards will help you secure a larger finance amount. If you’re struggling to meet credit payments, reach out to your provider to help you renegotiate the terms of your payment schedule.
Budgeting is essential when buying a new home. The sooner you start saving and adhering to a budget, the better off you’ll be. Start by creating a realistic budget, then stick to it.
You need to determine how much you can borrow, the question is easy but the answer is multi faceted.
A mortgage is a massive financial responsibility and to get a good idea of where you stand it’s best to have an honest conversation with your accountant to figure out what you can afford. Buying a property requires a large investment. If you don’t have enough savings, you might consider borrowing funds from friends and family. In some cases, you might even qualify for Australian government loans.
The amount of money that you can borrow depends on you and your finances at that given time. This is entirely based around what deposit is required as well as your loan serviceability, fully knowing this will help when you start searching for a property.
To determine what you can borrow and therefor how much you can spend on a property is complex, there are many costs associated with a home purchase and you can contact Select Legal to discuss all of these costs.
Some of these costs are:
A lender can request somewhere from 5% deposit to 20% deposit. This depends on your location, whether you are a first home buyer, the price of the home and other factors. It is worthwhile discussing this with your mortgage broker or your bank.
You may need to pay bank fees and interest on the deposit.
This is the insurance that protects the lender, not you. It’s usually a one-off payment made by the borrower at the time of loan settlement. You can expect to pay LMI if you borrow more than 80% of your home’s value.
This is a tax the state government charges when you buy or are given a property. The amount of stamp duty you pay depends on the ‘dutiable value’ of your property, and whether you are eligible for any discounts. A Stamp Duty calculator can be used to get an accurate quote.
Select Legal charge a flat fee for conveyancing of $990, for ‘standard’ conveyancing work.
There can be fees for valuations, applications and settlements. A mortgage application can cost money depending on the lender, and a valuation could cost you also.
Make sure you have a solid home or investment property by ensuring you complete a building and pest inspection. This should not be overlooked as it could cost you far more in the long run going without. Inspections average $500-$700 for peace of mind that the property is structurally sound and pest free.
When budgeting for a new home, you must factor in insurances, council rates, mortgage payments, utilities, relocation costs, tax fees, body corporate fees and property management fees amongst others.
Investors should be aware of different considerations when purchasing an investment property compared to buying a home. Decide if you plan on renovating and reselling the property, or if you want to keep it and lease it out.
It is essential to have distinct criteria for selecting the kind of asset to invest in. To achieve a good return on investment, you should purchase a property that will appreciate in value.
You should absolutely use the expert information of all key players in the housing market, whether they be Real Estate Agent, a buying advocate or Select Legal.
You should contact your local real estate agents for information about what’s for sale, tips for buying a house in the area, what the area is like and how the property market is performing, along with any other general queries. Appointing a buyer’s agent is handy if you are looking to buy at auction, but they can also work to find suitable properties for you, negotiate with the seller, and complete background checks on the property. Select Legal can advise on all legal aspects of the property purchase.
There are hundreds of financiers, dozens of mortgage options and many options to consider. Your research and knowledge in this space is essential.
You can go directly to a bank or to a mortgage broker. Mortgage brokers are now responsible for the drawing up of over 60% of all mortgages entered into and do give you a better choice and understanding. You of course can decide who assists with your loan.
Obviously mortgage pre-approval is a major step in the purchase process. This is also known as conditional approval or approval in principle, securing pre-approval before even searching for your home is ideal so you can know your price range. By providing your bank or lender with your financial details – such as your credit report, savings, income and investments – they will be able to review the information and grant you with pre-approval to borrow up to a certain amount, releasing you to find the right home for you.
A licensed conveyancer can request inspections for you while also managing the exchange of contracts and other legal searches. Once you have found the property you want to purchase, get a property valuation to help you figure out the right price to offer.
Finally, you are ready to make an offer! Don’t low-ball here less than 10% of the asking price, otherwise you may miss out when higher offers stream in. When you’ve decided on a figure, reach out to the agent and let them know how much you’re willing to pay and your deposit amount.
Next, simply exchange contracts and pay the deposit. Both you and the seller are not legally bound to the sale until the contract of sale has been signed and swapped. Included in the contract of sale is the:
If you’ve bought through private treaty you will have a cooling off period. This is not available when sale is made by auction. During this period you can cancel the sale if you change your mind, but you may be required to pay a penalty. The cooling off period varies by state.
In the time between exchange and settlement – generally six weeks – you should be busy arranging the balance of the selling price by finalising the finance and signing the mortgage. You will also want to insure your property, and you will be required to take out building insurance.
Once the balance of the purchase price and Stamp Duty is paid, the settlement of the property has been made and you will receive your keys and title deeds. Essentially, the lender will transfer your money to the seller and the property is ready for you to occupy!
Select Legal are the Solicitor & Conveyancer that Can Help You Find The Dream House
We’ve been helping people buy and sell houses for many years. Our team of solicitors are highly experienced and has helped thousands of clients through buying and selling property.
Our services include:
We also can provide additional legal advice on the following:
Are you eligible for the first home buyers grant? If you and your partner haven’t ever bought a property before, there’s a good chance you are eligible to receive the First Home Owner Grant (FHOG). FHOG is a national scheme, but each state funds its own and the amount varies state-to-state.
The government will determine whether you can receive the grant based on whether you have purchased a home or investment property previously, or whether your spouse or partner has too. It’s not necessary to apply in advance, but you need to submit your application within 12 months of purchasing your new home.
The importance of reading property and loan contract documents cannot be overstated. This is especially true for those who want to purchase or refinance their home.
A home is often the largest single investment you’ll ever make. You might get stuck with a bad deal if you don’t read the fine print. That’s why it’s important to thoroughly review these documents before you sign anything.
Once you sign the contract you may be eligible to a cooling off period
There are two types of cooling-off rights: statutory and contractual.
Regardless of whether you are planning to buy or sell a property, Select Legal is ready to assist with the process.
The advantage of engaging Select Legal is that all your conveyancing and property needs are met, whether they be standard or extremely complex, where our solicitors can attend to additional legal work required which includes drafting special conditions, drafting agreements such as a licence agreement or lease, letters resolving disputes etc depending on the requirements of each matter.
Our knowledge of the process and attentive service (as shown in our Google Review history) is what sets us apart from others in this field. Depending on the needs you have, Select Legal is ideally qualified to handle your transaction and ensure your purchase or sale goes through all the required legal checkmarks.
We also have the expertise to perform electronic conveyancing using the Property Exchange Australia (PEXA) digital property network.
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