How to Buy a House | Guide to Buying Your First Home or Investment

Guide to Buying Your First Home or Investment

Hey guys, if you’re ready to buy your first
house, lets go through everything you need to know in this video. The house deposit is the first thing you’ll
need to work for. You can save 10, 20 or 30% depending on your
smashed avocado consumption. Save 10% and you can borrow the rest from
the bank. But you’ll need to pay a one-off Lenders Mortgage
Insurance of another 2% which provides insurance in case you cant pay the mortgage.

Guide to Buying Your First Home or Investment

But this insurance protects the Bank, not
you. I know, its weird. Save 20% and we can avoid LMI fees and borrow
as normal. Save 30% and get complete access to borrowing
for high density apartments, because banks can still reject some high-rises with a 20%
deposit. and don’t forget to add 5% stamp duty to whatever deposit you have which pays
for the ownership transfer fees. Before even looking for a house, you’ll need
to assemble a 3 player team, with you as the manager. The first person on the team is a mortgage
broker to help you with pre-approval. This is generally better than approaching
a bank yourself because each bank has different criteria for lending and mortgage brokers
will know about all of them. So rather than taking a hit on your credit
history every time a bank rejects your application, mortgage brokers will choose the bank that
will definitely accept your application based on your circumstances, fill out all the necessary
forms and generally just save you a lot of time and effort.

Guide to Buying Your First Home or Investment

In addition, the service is free for you as
the bank will pay the broker a commission. The second person on your team is a solicitor
or conveyancer who will go through any purchase contracts and organise the legal processes
involved with transfering properties. All you have to worry about is the difference
between the two and which one to choose. A solicitor is a more expensive version of
a conveyancer who will also be able to help you with any complex legal obligations including
attending court. Conveyancers are suitable for more straightforward
properties and provide the same service at a lower fixed fee. As the house is probably the biggest purchase
of most people’s lives, it is generally recommended to stick with a solicitor as you never know
what mishaps might happen that will need the help of a good lawyer. Finally, a building inspector will be your
last recruit. This person will produce a building report
or strata report of any small defect that you might miss and prevent you from buying
a lemon, its always a good idea to go to the building inspection with them as well.

Guide to Buying Your First Home or Investment

Once you are pre-approved and know your maximum
borrowing capacity, you are ready to start looking. The two biggest property websites in Australia
are realestate.com.au and domain.com.au. Even though realestate gets the higher traffic
than domain they both have relatively the same functionality and results. One important tool to use as research is the
weekly sale results. On both desktop websites, click the Sold tab,
scroll down and click the Auction results. Choose the State, and then select a suburb
for the sales in that area. You can get to the same tool on the realestate
phone app, select any random listing, scroll down and press the Sales results link just
under the nearby school section.

Guide to Buying Your First Home or Investment

For Domain, press the More tab at the bottom
and scroll down to select Auction results. These results are updated every Saturday at
6pm and keeping an eye on these will help you to determine realistic prices for your
target locations and give you an idea of the price range. Once you’ve got your heart set on a house,
there are 3 ways of buying it. Off the plan, private treaty and auctions. Buying off the plan is exactly what it sounds
like. You go to the agents office, pick out a unit
or block from a drawing, get a copy of the contract and pay a holding deposit.

Once you have reviewed the contract with your
solicitor and signed, a non-refundable 10% deposit will be required to be paid. Before settlement, that deposit will still
earn you interest paid to your bank account, up to the settlement date when another 10%
will be due. Private treaty is where you make offers on
existing houses through the agent who then passes it on to the owner. This is the most common way to buying houses
in Australia and you’ll need to do this formally with a expression of interest letter that
the agent will give you and you can email back to them. This may take up to a few weeks while the
owner decides and waits for more offers. Your offer can be conditional where you can
back out of the deal with a refund if certain conditions are not met. These can include things like subject to valuation,
subject to finance, or subject to pest inspection. You can also sweeten the deal to the vendor
by offering an unconditional offer to buy the property as is.

Guide to Buying Your First Home or Investment

You would only do this if there is high competition
for that house and you already have your finances sorted, as there is no refund if you change
your mind. Finally, auctions are the fastest purchase
method and the bidding, contract signing and deposit paying are all compressed into 1 day. It is your responsibility to review the contract,
and get a building inspection all done before the auction day, as there is no cooling off
period in auctions. There’s been many stories of people changing
their minds after they win an auction and end up getting sued for damages. Now that you have signed the contract, its
time to get the bank’s final loan approval. The banks need to make sure that your income
and expenses haven’t changed in the time you’ve gotten your pre-approval and make sure that
the price you paid is the same as the actual value of the house by sending a valuer to
have a quick walkthrough. If the value comes back as less than your
purchase price, then your 20% deposit must now be increased to cover the difference as
the banks will only lend 80% of the valuation price.

If the value comes back as higher than the
purchase price, well done on securing a bargain and get to work signing the loan contract
with the bank before the settlement period is up. This is also the right time to apply for the
first home owners grant, if you’re eligible. A week before the final settlement date, you’ll
get the chance to do a final inspection. This happens after the previous owners have
moved all their furniture and appliances out and lets you check that the things that should
remain did actually remain as per contract. You should also check theres no unexpected
damage which the previous owners will need to fix before you accept it. The final settlement day is the actual day
when you take legal ownership of the house, and is the time when you’ll need to transfer
your 20% deposit plus the 5% stamp duty money into the loan account that the bank has set
up for you.

The bank will then combine your savings with
the 80% that they’ll loan you and use it as part of the title transfer process. The actual handover of the title and keys
are all handled between 3 professionals, the vendor solicitor and your solicitor, and the
bank’s settlement agent who will all meet together to sign the final documents of the
sale and transfer the finance. This is usually all done within 15 minutes
and the documents are then sent to the titles office which registers your name as the owner
of the property. You just need to wait for a call to advise
that it was all completed and to confirm a time for you to pick up the keys.

The only task left for you is to contact all
the utilities companies to connect all their services again and move in. And thats everything you need to know to buy
a house. Remember that buying a house is a great way
to to get ahead in your finances and the process is the same whether it is a residence or an
investment.

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