Buying a home is both a wonderful and scary experience. You get excited going to open homes and visiting new suburbs and soon feel frustrated when it comes to organising the finances. Much of this confusion is not knowing enough about the different steps to buying your first home and what’s needed for each stage.
STEP 1: Have a chat with your mortgage broker
In this first step, we get to know you and understand your financial situation. We work out how much you can borrow, how much deposit you need, what your repayments will be and the price of property you can purchase. We will also discuss the upfront costs of buying a house and a checklist of documents that the lenders will require.
STEP 2: Analysis & research to be completed by your mortgage broker
After our initial meeting and going through your financial situation, our job is to provide you the right financial solution tailored to your needs. We look for the most suitable lender and negotiate the most competitive rate with them.
STEP 3: Recommendations by your mortgage broker
This is the step in which we provide you with our top three lenders and why. We can either meet face to face in our office in Sydney or Melbourne to discuss our recommendations or we can email this to you and discuss further via Skype, Google Hangout or Facetime.
STEP 4: Preparation and signing of lender application form
Its time to apply for a home loan and get an approval in place. After presenting you with our recommendations of lenders as the most suitable for your needs, your job is to choose which lender and loan product you would prefer. Once you make your choice, our job is to prepare the loan application form.
STEP 5: Submit Application to the lender
Once we receive the signed forms, we will submit your application to the chosen lender and keep you up to date with the progress of your loan. We will also let you know if the lender requires more documents. This process may take from 7 days to 14 days.
STEP 6: Conditional approval or approval in principle
In this step, lenders have assessed your income and your deposit and what they are saying is that they are comfortable lending you the money and you can now start looking for a home. With a conditional approval from your lender of choice, you now have the confidence of making an offer once you’ve found the home of your dreams. It is also a good time to speak and engage a conveyancer and if you haven’t found one, we are more than happy to provide our solicitor/conveyancer partners in Sydney and Melbourne. A conditional approval is subject to several conditions including the valuation of the property you are buying.
STEP 7: Making an offer
You’ve seen close to a hundred homes and finally you find the one house that makes your heart skip. You can now approach the vendor’s agent and make an offer. If your offer gets accepted, you are given a 5 day cooling off period and you need to provide a .25% holding deposit. During the next 5 days, have your conveyancer read the contract and your finance broker order valuation and have the lender process your loan application for formal approval. Don’t forget to organise a pest and building inspection if you are purchasing an established home.
STEP 8: Unconditional/Formal approval from the lender
Exchanging contracts legally completes the process of buying a home. Up to this point, the agreement is usually not binding and both you or the vendor have the right to change your minds.
After discussing the contract with your solicitor or conveyancer and making the proper inquiries and necessary financial arrangements, you will be ready to exchange contracts.
There will be two copies of the sale contract: one for you and one for the vendor. You each sign one copy before they are exchanged. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent.
At the time of the exchange you will be required to pay a deposit of 10%.
STEP 9: Prepare for settlement
Arrange an inspection of the property with the real estate agent before settlement and make sure that any inclusions in the contract remains and there has been no damage to the property from the time you exchanged contract. Your conveyancer will provide you to prepare the remaining funds required for settlement. You need to prepare a cheque for this and provide to your conveyancer.
STEP 10: Settlement
Settlement usually takes place around six weeks or 42 days after contracts are exchanged. This is when you pay the rest of the sale price and become the legal owner of the property.
Once settlement occurs, you can now collect the keys from the conveyancer or the real estate agent.
Originally published February 7, 2019 8:00:00 AM