In theory buying a house is a simple process – you like a property, you buy it, probably with a little help from the bank.
But there’s a few more steps in the buying process that every purchaser should be aware of, and some of it involves calling in professional help.
Here’s our quick guide to buying a house in NSW…
Finance first
Lining up the right finance with the right lender to suit your needs is one of the most important elements of buying a home. Talking to potential lenders not only determines your budget but will impact your future lifestyle depending on the interest rate and payment terms on offer.
It pays to investigate finance early in the piece and get multiple opinions before committing to a lending institution.
Meanwhile bear the following questions in mind:
· What happens if interest takes go up?
· What happens if my employment circumstances change?
· Have I factored in additional items like insurance, body corporate fees, and council rates?
· And, if it’s an investment property – can I afford this if the property remains vacant for an extended period of time?
Find a property
Once you know your budget you can commence the house hunting in earnest, sourcing suitable properties to meet your financial goals.
If your intended purchase is an investment, the type of properties you may be looking at could be significantly different to what you would consider for yourself. So be clear on your purpose, financial restrictions and ultimate goals as you enjoy the hunt and inspection process.
Due diligence
If a property piques your interest ensure you conduct the necessary due diligence including basics like pest and building inspections. Building inspections should cover the general condition of the property, areas in need of upgrade, potential structural problems and more.
Ensure you have a comprehensive list of exactly what will be covered in your building inspection.
Meanwhile, pest inspections look for current incidents of pests like termites, but also flag potential future weaknesses. Again, make sure you receive a list of exactly what your pest inspection will cover. Different areas of NSW may call for different checks.
Pest and building inspections can be conducted prior to making an offer or after the sales contract has been exchanged, providing there is a pest and building clause in your contract of sale.
Be sure to visit the property at different times of day, taking in the general surrounds like road noise, neighbourhood ambience etc.
Making an offer
Your financial situation, the terms of sale like auction or private treaty, and the results of pest and building inspections will determine the type of offer you make. You can feel out a general ballpark figure that might be accepted with the agent, but any formal offers will need to be made in writing.
This offer may include terms like an extended finance period, pest and building clauses and more.
The sales contract
If the offer is accepted you will be required to pay a deposit, usually around 10% of the property value. Now is the time to engage your legal team, if you haven’t already done so.
Standard contracts require the assistance of a solicitor who acts as a conveyancer, checking the terms of your contract and conducting necessary searches. You can undertake the conveyancing yourself should you feel comfortable and proficient in this realm.
These searches should encompass council records of the lot number which is to be purchased, any encumbrances, rates outstanding, and works undertaken on the property that may or may not have been subject to council approval.
While a professional conveyancer should handle these with ease it is in your interest to ensure all the Is are dotted and the Ts crossed, and you an learn more about your responsibilities here.
This contract may also include additional items like fixtures you expect to receive as part of the property sale, such as curtains, TV aerials etc.
The cooling off period
When buying a house in NSW there is a standard five-day cooling off period from the time you sign the contract of sale. This enables you to walk away from the purchase without major financial liability, however chances are you will be required to forfeit around 0.25% of the property value.
Stamp duty
NSW buyers will be required to pay stamp duty within three months of the signing of the contract unless they are first home buyers purchasing properties or land up to a specific value. Stamp duty is calculated on the purchase price of the property.
Lending inspection
Once you have signed a contract of sale on a property your chosen lending institution will need to conduct a valuation. This ensures the property is worth the price the real estate has set, thus ascertaining it provides sufficient security for any loan.
Settlement period
It takes an average of four to eight weeks between the initial signing of the contract until ownership transfers at settlement. During this period the following occurs:
· Your conveyancer ensures all necessary council, lot, and encumbrance checks are conducted
· Your lending institution prepares the mortgage
· Requisitions on title are sent to the seller to identify any issues that may not yet have been revealed.
· A survey may be conducted of the property, if required.
Insurance
Finally, it is important you line up insurance to cover your property from settlement date. At this point the property in question is in your possession, meaning if there is a fire, vandalism or natural disaster you bear financial liability.
Settlement date
This is the big day when buying a house as it’s the official date a purchase becomes yours. Your solicitor or conveyancer will advise the exact time and place where the keys to the property are to be exchanged. Congratulations, at this moment, the property is yours…
About United Strata
Specialising in the Macarthur region, United Strata offers professional yet personalised service for buyers, sellers, landlords and tenants alike.
We’re with you every step of the way when buying a house and you can learn more about our services here, or contact us directly for further advice.
