Home Purchase Guide
The purchase of your own home can often be the most important, and costly purchase you will ever make. So it pays to do some research and planning to ensure you get the best possible loan arrangements by taking these steps:
- Ask lenders or AAFH on how much you can borrow and when
- Calculate what you can afford to spend by adding the amount you have saved with the amount you can borrow
- Allow for lender fees, duty, legal and moving costs
To get the best outcome you should follow these steps:
- Do your market research and budget accurately
- Complete your application interview with your chosen lending entity or AAFH
- Complete and lodge your loan documents
- Exchange contracts
- Complete settlement
There are a number of costs that you need to be able to cover in addition to your loan including:
- Stamp duty
- Conveyancing fees, legal costs and search fees
- Pest and building reports
- Depreciate report (for investment property)
In this competitive real estate market loan pre-approval can give you a key competitive edge. Pre-approval effectively means your finance has been conditionally pre-approved. Pre-approval is obligation-free and allows you to demonstrate to vendors that you can afford to pay the price of the property. It allows you to search for a property with confidence, in the knowledge that your finance is secured and you are ready to move when that perfect property appears on the market.
Pre-approval is obligation-free and is valid for six months and can be renewed for an additional six months if you don’t find a home within that time period.
To maximise your chances of success you should submit a formal application as soon as possible
Buyers of off-the-plan properties are covered by a defects liability period. This is a period of time – usually 90 days after the purchase date, where a vendor is obliged to “make good” or correct, any defects that arise from faulty workmanship and/or materials. Buyers should be aware that existing homes are not covered by any defect liability periods. Therefore buyers of existing, rather than new, off-the-plan properties do so under “buyer beware” conditions which put the onus of risk onto the buyer alone. This underscores the importance of doing thorough research and building inspections when buying existing properties.
Invest in property
Property investment brings many benefits including:
- Reduction of your taxable income
- Increase in the market value of the property
- Rental income that is generated from rental of the property. The difference between the rental income and costs such as loan repayments and interest equal profit for the owner.
What time of information do I need to determine which suburb is right for my property purchase needs?
Buyers should research the following types of information before deciding which suburb to buy into:
- Median property value
- Recent sale prices
- Demographic breakdowns
The best way to make a successful investment in property is diligent planning that can include the following steps:
- Determine your investment strategy
- Choose a home loan and look into how to repay it
- Choose a property type and location
- Obtain insurance
- Put the property up for rent
To give you the best possible outcome from your loan arrangements consider taking the following steps:
- Loan Submission
- Conditional pre-approval
- Formal Approval
In most cases, it only takes about two weeks to secure finance if there are no outstanding requirements requested by the bank. However, the process can take longer due to factor such as:
- Letter of employment or payslips have expired
- Contract of sales needs to be amended
- Floor plans do not include measurements
If you have been with your current lender at a high interest rate for considerable time, eg for the past seven years, it may be worthwhile to refinance if you can get a lower rate or more flexible loan. Refinancing is not for everyone, however, if there are clear benefits it may be worth considering despite the costs involved in changing your loan arrangements such as government fees.
When planning to refinance your loan you can:
- Access the equity in your home
- Reduce your home loan payments
- Get a loan with more flexibility if you are coming to the end of a fixed rate term
- Consolidate all debts to a lower rate such as personal loan and car loan and credit card debts so it’s easier to manage
When you refinance either with your existing lender or new entity there are associated costs to be factored into your decision such as:
- New loan establishment fees
- Additional mortgage stamp duty (if any)
- Current lender discharge fee
- New lender settlement fee
- Mortgage registration and de-registration fees
The loan refinancing process is relatively easy compared to other financial processes. Basically, there are six steps that you would need to go through for refinancing.
- Explore the costs of refinancing
- Choose the right home loan,
- Apply to refinance your loan,
- Complete your approval and documentation
- Arrange your settlement,
- Drawdown on your loan
Refinancing involves the borrower and the lender. Before a refinance loan can settled you need to sign loan authority, loan offer documents, and your current lender’s discharge authority.
In normal circumstances, the builder that you choose must provide a tender or a quotation so that the bank can proceed with a valuation and provide you with your construction loan. In event where tender or quotation is not possible, both buyers and builder can sign a contract with or without “Subject to Finance” prior to the bank proving an unconditional loan approval for the construction of the property.
What are the minimum required documents to bring to first meeting to discuss a loan with AAFH experts?
You should bring a signed building contract or a tender with you in order to proceed with your construction loan.
The purchaser(s) and the builder must sign the building contract.
The builder must provide you with the following documents: Building contract, contract of sale, schedule of required payments, copy of council approved plans, builders risk insurance policy, Plan of Subdivision, and Builder’s Permit.
After your construction loan has been formally approved, which of the following documents will need to be signed, if you are a brand new customer, before your construction loan with your bank can settle?
The following documents must be signed: the loan offer, loan authority, mortgage, transfer of land, account opening form, and progress draw invoices for the bank to pay, any receipts for deposit and invoices which has been paid, occupancy permit and building insurance prior to final payment by bank to your builder