What to consider when buying a house.

There are many considerations and different things to think about when buying a house.

Every suburb or town has different appeal. Every house has a different location and layout. We look at some of the things people should look at when buying a house. There may be different reasons for you to buy for example your home compared to an investment property.

Our conveyancing lawyers have devised a list of things you might consider when buying a home or investment property.

Finance & Budget

This will go straight to the heart of whether you can afford your dream home or not. For your first home before you begin your property search getting your budget in order is key. It is important to understand how much you can afford and how soon you can pay down your loan. Remember it’s your house and your budget so don’t compare to others to avoid getting disappointed.

If you are relying on a bank or broker for the purchase, you should consider the following:

Deposit

For every purchase you are required to pay the Vendor, at most, a 10% deposit. You can often negotiate less. This is generally payable when signing the contract of sale. For off-the-plan purchases you may consider a deposit bond or bank guarantee as an alternative.

Finance Issues

It is important to consider negotiating a longer settlement on the property if you need finance. You may need to re-apply for finance as approvals are often limited to a few months. If your employment or finances change this may mean that you are denied a finance approval. We strongly recommend that you don’t enter into an unconditional contract of sale without finance approval. If you don’t have finance approval, it is best to make the contract subject to finance to avoid being in default come settlement time, the consequences of which can be disastrous.

Property Holding Costs

You should also consider what ongoing expenses there are for the property – for example rates and owners corporation fees.
Additional out of pocket expenses when buying a house can be:

Mortgage Insurance
Stamp Duty & Transfer Fees
Legal Fees for Conveyancing
Removalist Fees
Insurance
Rates & Disbursements – We recommend allowing around $3,000
Bank and or broker fees
Disbursements ie certificate and settlement fees.

If you are an investor, you will also need to consider:

Potential vacancy of property
Letting & advertising Fees
Repairs and maintenance to make suitable for tenants
Real Estate Agent’s fees
Landlord’s insurance

Location, Location, Location

After you have set a budget where and what you can afford to buy will be clearer. Picking a great location can be difficult if you are not local to an area. However, there is a wealth of knowledge from investor groups about how to choose the best location. Location requirements are different for everyone.

You might consider preparing a list of what amenities you prefer depending on your lifestyle. For example, for a young family or perhaps items such as shopping and parks.

TIP: Good Schools and access to public transport are usually at the top of the list.

Amenity of the Home

It is important to consider the amenity of the home and if any additional work needs to be done to renovate or update the property. Mostly people consider how many bedrooms first and work down their list of priorities from there.

It is helpful to write down your wish list of what you can live with and without in terms of living spaces and amenity. In the flurry of house inspections and negotiations some key items can be overlooked. A list will help you stay focussed.

Many properties that look like a “deal” may have expensive fixes required. Be prudent and get a building and pest inspection done.

TIP: For those on a tight budget – if you are bidding at auction bidders can sometimes pool together to get a report done.

How long does it take to buy a house?

The time it takes can vary wildly. Auction dates and finance are usually the main factors that affect how long the process takes. These need to be considered at the time as the length of time to obtain finance can vary dramatically depending on how busy the banks or individual lender is.

Your personal circumstances and choice of broker will make a big impact here. A more complex finance application will take longer and the more organised and connected your broker is the faster things will move.

Picking a settlement date should be done after you have spoken with your broker and lender or conveyancer. Establish how busy your lender is BEFORE picking a settlement date. Missing settlement is stressful and expensive in penalty interest and possible default notices.

We typically recommend allowing at least 45 days if you are requiring finance. Anything less is stressful and doesn’t allow any wriggle room.

You will also need to consider how long it may take to sell your existing home if you have one. Trying to get both settlements on the same day can be tricky. If you need to sell first to buy your next home, it is always best to have your existing home sold first. This will ensure you know what funds you have and what timeframe you have.

You may want to talk with our team about arranging a simultaneous settlement.

Be prepared to be patient

Buying a house can be a frustrating process. Most buyers don’t know if the agent is telling the truth or not and the process of a private negotiation can be clouded. Auctions can be stressful and bidding can become very competitive.

Sticking to what you can afford and bidding for the property and not against the others is wise advice. Losing out on properties and finding yourself as the bridesmaid can be deflating. Remember there is always another deal of the century available tomorrow! Most people do eventually find a property that suits.

Get to know the local agents

Agents love to talk and the more you know about what is selling and sold in the area the better buying decision you will make. Spend the time talking to agents from competing properties and get their opinion on the local area as well.

Get Good Advisors

Having professional and reliable legal and finance advisors is very helpful. Your conveyancer can help support you through the negotiation period with legal advice. They can also be a good sounding board for issues if you need a second opinion. We have heard many client’s tales and woes when buying a house and we can help you avoid common mistakes too.
Our top tips for buying a house are:

Get it in Writing – Don’t rely on ANY verbal agreements. Real estate agents are masterful at brushing aside requests to add conditions into contracts. If you want or need it – get it in writing!
Get Contract Advice – It may seem like another thing to do but can save you money. We look for onerous special conditions and any issues in the Contract and Section 32.
Contracts are legally binding and difficult to get out of down the track.
Return documents and respond to correspondence quickly – It can save you a lot of time and help prevent issues if you get documents and correspondence back quickly. This is true of both finance and legal documents and correspondence.
Know your finances and borrowing capacity – This will allow you to determine your limits and how much you can offer.
Due Diligence – make sure you have carefully inspected the property and have photos. You cannot argue if those problems were present on the day of sale.

We can help you buy a house. We are a friendly, professional and experienced team. We look forward to assisting you through the process of buying a house.

Speak to a conveyancer today on 1300 900 440 or complete an online enquiry form below. We will happily respond to you promptly.