It’s far too easy to get caught up in the emotion of buying a property, after all, it’s an exciting and complex adventure. The issue here is emotions cloud judgement and you can miss important steps or sign on for a less than ideal property when you dig a little deeper.
To make good on your goal to own an amazing property, all you need is to find the right professional support: a quality mortgage broker, supportive lender, qualified conveyancer as well as making sure you complete third-party property inspections for building faults and pest control.
These professionals will be able to see problems and challenges you might miss through being rushed, emotional or just not having the proven experience to know what to look for.
Looking for ways a property won’t work for you is just as important as determining what will work.
To avoid the overwhelm and stay grounded as you make your property choices, here are three important things to know to make your sale smooth and seamless.
With housing prices in Australia high, even the expected slight drop in prices to come won’t help most people buy their ultimate dream home straight up. That means you are going to have to compromise in a few places to make the properties that are available to you fit your budget and lifestyle preferences.
The way to do this is to have a list of non-negotiable items where you are not going to settle for less. Usually, you want these items to be fixed ones, which means they can’t be easily changed or renovated later on, like room size, number of rooms, backyard size or location.
Other items that can be changed over time, like a bathroom makeover, new kitchen or outdoor entertainment area might be more flexible because you can make it your own down the track, depending on the property, property size and cost. Of course, every situation is different, the important thing is you know what your non-negotiables are for you, and the reasons behind them.
Having a concrete list is also a great way to cut through the emotional overwhelm that can hit when you view a property. This way you’ll have something objective and measurable to fall back on and help keep you grounded.
Now that you know what you want, it’s time to figure out what you can spend. It’s important that you do a lot of groundwork here to prepare.
Draw up a budget and analyse your income and outgoing expenses. You’ll want to start saving as much as you possibly can for a deposit as well as to cover your upfront property costs.
While there are multiple government schemes to assist with getting into a property sooner, you will still need at least a 5% deposit to qualify. Many auctions also require a 10% deposit to be paid on the day. There are also government fees, transfer fees, loan fees and stamp duty you may have to pay as well.
A standard rule is, the more money you have available, the more flexibility you have with a choice of lender, choice of property and less stress in purchasing your home.
Your lender will be thoroughly checking your spending and saving habits to see if you are able to make your mortgage repayments comfortably. You can help here by spending your money wisely and paying off your debts (including After-Pay and interest-free loans) to prove you have what it takes to afford your mortgage.
Your lender will also be the one to apply for any grants, concessions and schemes you may be eligible for, so be sure to provide them with any information they need to make this happen.
A mortgage broker can help give you access to more lenders and find the right fit for your financial needs. A broker will also be an impartial advisor on your finances and your best options going forward. The bank will pay their fee when you take up a loan so the service and broker advice to you is free.
Once you have your loan pre-approved, you have a realistic budget to work with. This helps you look for the right property, in the right location instead of becoming emotionally attached to a property you later find you are not eligible to purchase.
Your lender should be supportive and take your situation into account, not cherry-pick the best of your savings to give you the highest possible loan amount. Check with your finances and make sure that the monthly loan repayments are within your expected future budget. Also, be sure to crunch the numbers and see what a future rate rise will mean for your repayment obligations and what sacrifices you'll need to make to cover the gap.
Even though you won’t be spending money on rent when you move into your new home you will need to cover various council rates, maintenance and other home-related expenses you might not be covering currently.
Now it’s time to start house hunting!
Once you have a property you really love - and ticks all your essential boxes - it’s time to find a conveyancer. A conveyancer handles the legal side of your property transaction and puts your paperwork through.
The right conveyancer for you is the one you can talk easily with, who understands your needs and can translate all that jargon and difficult legal language in a way you can understand. It also helps to use a conveyancer who understands your local government rules and regulations and has worked with your property type extensively before.
Rather than go on the cheapest price, compare conveyancers on the services they offer. A more expensive conveyancer will include more services as part of their package, meaning you won’t get caught out with any nasty surprises in your property transaction, or be hit with a high bill if you need something that isn’t already included, like a video call to work through a difficult section in your property contract.
Before you sign a contract send it through to your conveyancer to check over.
The property sale contract will be available to you without making an offer. If the property is going to auction or is part of the online sales program, Open Negotiation, the contract will be provided upfront with the listing details.
Usually, in private sales, you will need to request an emailed copy of the contract from the selling agent. You can also ask them to email the paperwork directly to your conveyancer.
There are pages- and pages - included in your contract, some of these are mandatory and are nothing more than instructions, others are directly related to the inclusions and processes for this particular property sale and how it affects you as the buyer.
Once you sign the dotted line, you are locked into any terms and conditions included (or excluded) in the sale contract. While most contracts are cut and dry, it can still be a savage disadvantage for unsuspecting buyers who sign without understanding the full terms and conditions involved.
As well as all the items on the contract you can see, there are also multiple items you can’t. Standard contracts can be amended to remove all sorts of conditions that would normally be offered. Unless you have experience in what is supposed to be included, you won’t notice if something has been changed, or you can be pressured into signing, even if you notice, being told it won’t affect you negatively.
Having a conveyancer look over your contract before you sign is a way to know what’s really going on by providing objective advice and professional information.
Your conveyancer will also do some detective work to see if there are any existing faults with the property title, including unpaid debts, property line disputes or inaccurate or historic sales that might not have been closed off correctly.
Finding faults in the contract or with the property title doesn’t mean you can’t purchase the property, it simply gives you room to negotiate the terms before you buy and have a new contract written up that takes into account any conditions that are needed for the property sale to be secure for you. This can include things like:
While the fun part of hunting for a home is in the open inspections and envisioning yourself inside a property - and of course organising furniture and moving in - the real work begins well before this.
It’s the planning and focus of detailing what you need from a property, what you can afford and how to get the right legal advice that will see your property transaction sail through smoothly and easily.
When you have the right lender and conveyancer on board you can rest easy and have fun with the rest, and enjoy discovering and owning your first or next home knowing the hard tasks are being looked after for you.
Despite the current constraints, Mr Lowe said many households had built up very large financial safety nets during the pandemic, saving an extra $250 billion over the past two years, and also stated that the number of people falling behind in their mortgage payments is currently declining. So what happens to property values as interest rates rise?
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