Get a Pre Approval (Approved in Principle)

It is advisable to apply for finance pre approval while you are shopping around for a home to purchase.

Benefits of getting a loan Pre Approved:-

• Getting your maximum borrowing capacity pre approved by a lender subject to special conditions such as acceptable security, satisfactory valuation report etc.
• With “Pre Approval” you are able to save at least 3-5 working days of application processing time to meet with your purchase contract finance deadline later once purchase contract is signed.
• Knowing your maximum borrowing amount will give confidence in putting an offer within your price range.  

Saving for a deposit

A consistent savings history for a minimum of 3 months will illustrate to lenders that you have the discipline in managing your finances. This will give lenders the confidence that you would be able to manage your home loan repayments.

Please take note that if you do have a deposit less than 20%, your loan costs will increase due to Lenders Mortgage Insurance (to protect lenders not you as a customer) and this will be as part of your purchase costs. If you are eligible for the First Home Owner Grant this can go towards purchase costs.

Personal or Family Budget

Completing your personal or family budget will give you an idea of how much you would be comfortable in paying weekly, fortnightly or monthly while still enjoying your current lifestyle and meeting existing financial commitments.

Signing a Purchase Contract

Once you have found a property, the next step is to make an offer to the vendor. It is important to sign a purchase contract with subject to the following conditions:-

• Finance approval with finance deadline minimum 14 days from the contract date.  Satisfactory building and pest control report.  Satisfactory valuation report.
• Adequate bank valuations to ensure you are not paying too much and also give you the option to “crash the contract” should the bank valuation come in below your purchase price (if you choose to do so).

You are required to pay a deposit with the Real Estate Agent when you are putting an offer to the vendor. The higher the deposit is, represents that you are serious in buying the property. This deposit is fully refundable if your offer is not being accepted or you decide not to proceed with the purchase.

Once the agreed price of the property is achieved, a contract is signed and dated. In general, the real estate agent will request for a minimum deposit of 5% of the agreed purchase price and is usually payable in 7 days from the contract date. But if you do not have a deposit and apply for a no deposit type of loan, you can let the agent know that there will be no further deposit payable until settlement date.  

Conveyancer or Solicitor

Choosing a competent and professional solicitor or conveyancer is important. Conveyancer or solicitor cost varies from $600 to $1,200 (this cost is different from state to state). Sometimes it is worthwhile to pay a little extra for a reliable and satisfactory service.

A good solicitor or conveyancer will check the sale contract and let you know if some of the conditions is not acceptable, conduct a title search etc. In addition, should there be any legal issues your representative will be able to deal with it professionally.

Building and Pest Controls

Once your offer has been accepted, you need to organise building inspections. Some serious buyer or investor will get a building inspection done while still negotiating price with the vendor.

This gives you the right to walk away from the contract should the bank value of the property be below what you paid for it.

Completed Purchase Contracts

Once both parties have agreed to a price, the contract is dated and signed by both parties.

The purchase contract should have details of the vendor residential address, the property address you are buying, buyer's details such as full name and address, and solicitors' details for each parties.

The contract will also state the finance due date, settlement date and other special condition (if any).

Both parties will receive a copy of the dated and signed contract. The completed signed contract needs to be faxed to the buyer’s chosen lender so that they can organize a valuation and get the loan formally approved.

Once the loan has been formally approved, you will receive mortgage loan documentation. It has to be witnessed and signed in front of a qualified JP or solicitor. When solicitors receive signed mortgage loan documentations, both parties' solicitors will organize a settlement date.

When settlement is done, you are the proud new owner of the property!