Ok so you've decided to buy your first home, but where do you start?
STEP 1. SEE A MORTGAGE BROKER FIRST
The reason for this is so a Mortgage Broker can sit down with you and go over your income and expenses to calculate exactly how much you can borrow. This in turn, determines how much of a deposit you need. A broker will also factor in all the potential costs that need to be covered, on top of the deposit. Please refer to the potential property costs in the frequently asked questions section HERE. You may also be entitled to government grants or schemes that you are unaware of. Your Cobblestone Mortgage Broker will be across all of these and will be able to identify what you might be eligible for which could save you thousands.
STEP 2. DECIDING ON A PROPERTY TYPE
Now you know what your borrowing capacity is, its time to take a look at the different types of properties within your price range. Do you want to buy a unit, townhouse or house? Would you consider buying land and doing a construction loan or maybe a house and land package. What are the advantages and disadvantages of each? What are the differing costs in regards to stamp duty and rates vs strata fees? All of these need to be taken into consideration. Get in contact if you need further assistance deciding on a property type.
STEP 3. RESEARCH THE MARKET
Now you know what you are looking for, it is important to look at the market trends in the area and find out if prices for you particular property type are increasing or decreasing. Your Cobblestone Mortgage Broker can run suburb reports for you showing statistical data based on each of the different property types. These really come in handy in choosing a suburb and seeing how the sales prices have progressed over time. They are even broken down by the number of bedrooms per sale. The reports show other useful information such as owner occupiers compared to renters, size and population of the suburb, and rental history of that area.
STEP 4. FUTURE CONSIDERATIONS
Another thing to consider is supply and demand in the area. If there are a lot of developments and supply is high, prices can tend to drop or remain the same until the supply has been filled. Where there is high demand and little supply, you will find the prices tend to be on the rise. It might be an idea to contact the local council and find out what development plans are in the pipeline. You may think you are purchasing in a quiet leafy suburb with plenty of bushland around you, only to be rudely awoken by bulldozers a few months after you move in. We would also recommend talking to local Real Estate Agents to find out what the most sought after properties are for that area. If you are looking at a 3x2, but find out that 4x2's are in highest demand and the quickest to sell due to the number of families in the neighborhood, you might want to reconsider your purchase or look at properties with potential to add another bedroom down the track. After all, you are likely going to want to sell in a few years if it is your first home.
STEP 5. START LOOKING FOR PROPERTY
So you know how much you can borrow, how much deposit you need, you've decided on the type of property you would like and you've narrowed it down to a few suburbs. Your Mortgage Broker will advise if a pre-approval is warranted at this point or if an initial assessment is sufficient. Next step is the fun part - start looking! Once you have found a few you like, send through the addresses to your Mortgage Broker and we can run a detailed property report for you. These will have more information than the real estate might offer such as time on the market, failed campaigns, rented periods, sales history, and much more.
STEP 6. PUTTING IN AN OFFER
This can be quite daunting if it is your first time. It is important to note that different states have different laws regarding Contracts of Sale so be sure to understand what you are getting into before signing on the dotted line. Consult the property reports your Mortgage Broker ran for you. These will have an estimate value and using the information such as time on the market or failed campaigns, can help you decide how low to go with your offer. For example, if a property has been on the market for 6 months and they tried to sell multiple times before, you might want to put in an offer lower than the asking price, as they may be at the point where they just want to sell and will take the next offer they get. Putting in an offer is as simple as phoning the agent and giving a verbal offer over the phone. They will then go back to the seller and they will either accept or come back with a counter offer. This can go back and forth a few times before you both agree on the price. Be sure to get the appropriate building and pest inspections down prior so that your don't get any nasty surprises.
STEP 7. FIND A SETTLEMENT AGENT OR CONVEYANCER
There are usually a number of professionals involved in the whole transaction and a Settlement Agent or Conveyancer is a key player. Your Settlement agent can submit your First Home Buyers forms & prepares your settlement. They will be the ones liaising with the lenders solicitors on your behalf and ensuring that the settlement goes through without a hitch. Make sure you ask around and ensure that the person you decide on has a really good reputation. The whole transaction can fall over at the last minute if mistakes are made so this is an important decision. Your Mortgage Broker or Real Estate agent may recommend someone to you that they have worked with in the past.
STEP 8. GETTING UNCONDITIONAL APPROVAL
Depending on what state you are in, you may already have an application submitted, or, you might just be getting to that point now. Either way, you will need unconditional approval in order to lock down the sale. Your Mortgage Broker will advise when the best time is to submit the application. In NSW you would need to have an unconditional approval before you can make an offer, exchange and pay the 10% deposit. You then you have a 5 day cooling off period, after which you are locked into the contract. The cooling-off period starts as soon as you exchange and ends at 5pm on the fifth business day after the day of exchange. If you use your cooling-off rights and withdraw from the contract during the 5 business day period, you will have to pay the vendor 0.25 percent of the purchase price. This works out to be $250 for every $100,000. In Western Australia however, you can make an offer with as little as $1,000 deposit and then have 28 days to obtain finance approval. The only way out of the contract at this point is a decline from the bank.
STEP 9. SIGNING THE LOAN DOCUMENTS
Once you loan is approved, the nominated lender will issue your loan documents. These are then signed by the applicants, witnessed, and returned to the lenders solicitor. Your Mortgage Broker and Settlement agent will work together to make sure all the documents are returned correctly. The lenders solicitor then ensures nothing is missing and sets a settlement date in accordance with the contract. You will need to transfer any funds to complete into your settlement agents trust account or into a nominated bank account for direct debit a few days prior to settlement. Any First Home Buyers Forms should have been submitted by your Mortgage Broker or Settlement agent prior to ensure you get any stamp duty exemptions or grants you may be entitled to.
STEP 10. SETTLEMENT
After the loan documents are verified, settlement is booked in and all you need to do now is wait. Your Mortgage Broker and Settlement agent will check that everything is in order a few days prior. Most settlement these days are done online via a system called PEXA. Your Settlement agent will have access to this system and can keep an eye on the progress of the transaction. Once settlement is complete, your Mortgage Broker will call to give you the good news. You can then collect the keys from the Real Estate Agent and you are now the proud owner of a home (and a mortgage).
If you require any further information please get in contact with us today
phone: 0410 691 048