Thinking about buying a new owner occupied house or upgrading or downsizing?

Buying a house can be very exciting but also very daunting.  The first thing to do is to work out a budget and start saving for a deposit if this is your first home.  If you are a first home owner then you might be applicable for the Governments First Home Owners Grant.  There is specific criteria for this so if you want to find out more then visit the Great Start Grant website.  The next step would be beneficial if you talk to your Mortgage Broke to see what is available for you.  There are so many lenders and products out there that it is hard to work it all out.  Go to a professional person to help you along the way.  It will be worth it and Mortgage Brokers don’t charge you a fee for their services.

How Much Deposit Will I Need?

Generally you will need at least 5% deposit of the purchase price and have to be able to prove genuine savings over at least 3 months. Some lenders will take into account the rent that you pay as genuine savings if you have lived consistently in the same home but there are different conditions as well.  If you have under 20% deposit then Loan Mortgage Insurance (LMI) will apply.  LMI protects your lender in the unfortunate event that if you default on your Home Loan. When you are getting a home loan from your lender then they are taking a small risk that you may not repay your loan so therefore this insures the lender in the loan that you take out.  The higher the percentage that you borrow against your home the higher the upfront premium will be.  This can be added to your home loan in most cases depending on your overall lending ratio.

Is Pre Approval Necessary?

You do have an option of getting Pre-Approval but these days this only lasts for 3 months and then will need to resubmitted.  It is also subject to the Loan Contract, Valuation and updated information as required.  If you are looking to purchase Off the Plan then you really need to consult with your Mortgage Broker and Solicitor as once again the approval will only last for 3 months with most lenders.  This could leave you with an Unconditional contract but realistically you don’t have formally approved finance.

It is advisable also to look at your personal insurances that you have adequate cover in the event of if one of you falls ill or even worse losing your loved one.  You will still need to pay your mortgage and also other living expenses.  It is best practice to ask your Mortgage Broker is they can refer you to a professional to get this checked and arranged.  The other very important advice is to ensure your Will is in order.  These might seem to not be very important but they are very important to get organised.

If you are purchasing land and building a home on it then you are best getting the land and house contract together so that it is one approval process otherwise there has to be 2 separate loan applications.  This can happen but it would be better to have them both together.

What Is A Finance Clause?

Once you have your deposit or have signed a contract on then make sure you have a finance clause in your contract.  Ensure that you have a finance clause in your contract and allow 14 – 21 days from date of your contract (21 days would be preferable), then you should take your contract to your Solicitor/Conveyancer before you sign the contract for them to view over it.  This is a decision up to yourselves.  Some people decide that they will not do this and wait until it is signed.  Once the contract of sale has been signed then the loan process will begin.  You generally need the last 2 pay slips, last PAYG Summary, or if Self-employed then last 2 years Tax Returns for all entities and Notice of Assessments, and last 3 months of savings statements.

The loan is then submitted to the lender, and tracked by your Mortgage Broker.  Once formal approval is gained then you or you can get your Mortgage Broker to do this, is then submitted to your solicitor/conveyancer.  The lender will then prepare loan documents and these will be forwarded to yourself or your Mortgage Broker. Once these are received, a meeting will then be arranged to explain these documents to you and they will need to be witnessed by a Justice of the Peace or Commissioner of Declarations.  These documents are then forwarded back to the lender and then preparation for settlement begins.

What Does The Conveyancer Do?

Your Solicitor/Conveyancer will liaise with your lender and Mortgage Broker and deposit and any fees applicable apart from your loan will be required to be transferred to your Solicitor/Conveyancer usually 48 hours prior to settlement.  Settlement date and time will be arranged by your Solicitor/Conveyancer and Lenders solicitors.  At settlement a representative from your Solicitor/Conveyancer, Sellers Solicitor, New Lender Solicitor, and Outgoing Lender Solicitor will attend to exchange Monies, Release of mortgages, new mortgages etc.

Congratulations…..  Settlement has happened and you will receive the keys to your new house….

Once settlement has happened, you will then receive relevant paperwork from your Lender with repayment details, Offset Account (if applicable), Account numbers, Internet Banking and relevant Eftpos/Credit Cards (if applicable).

Once again purchasing a house, townhouse or unit is very exciting time in your life but it can be very overwhelming.  By getting yourself a professional team to assist you and support you through this exciting time is a great way to start.

Please note that this information is subject to change and every person’s situation is different. If you would like more specific information then please contact myself to discuss on a more personal level. We are certified Sunshine Coast finance advisors who also provide finance options for many clients.