STEPS IN THE PURCHASE OF YOUR NEW HOME
You decide to purchase a new home.
You approach your lending broker or bank to find out how much you can spend on your new home. This may involve filling out a loan application or loan contract and providing any necessary documentation to the lending broker or bank.
You look for your new home. There are a number of methods available for finding a new home. These include print media, ie newspaper and real estate magazine advertisements for houses, going to your local real estate agent office and asking what they have available, and looking on the internet. This process of looking and comparing properties is possibly the most important part of the purchase.
When you find a house that you like and can afford you negotiate with the owner a price. This negotiation is usually conducted through the owner’s estate agent. It is always recommended to receive proper advice from your solicitor as to the specific terms of the written contract for sale before you sign any documentation. It is also important to keep in mind that usually people selling properties are not required to give any warranties (unless of course it is a new house and you are purchasing from a developer). This means that normally you are buying the property ‘as is’ and subject to any defects).
Once the price of the home is agreed upon, the Sale Contract is signed, dated and each parties’ legal representative is given the copy of the contract signed by the other party. This process is known as the ‘exchange’ of the contracts. From this time you are bound to purchase the property from the owner on the terms set out in the contract, subject to any cooling off period. From the time of exchange you generally have only six weeks to complete the purchase of the property, so it is important that any finance you require for the purchase is up to date. If you have not already done so, notify your lending broker or lender of the details of the property so that they can carry out any necessary valuation
Legal Advice. At this time if you have not already done so you will require legal advice and assistance with the purchase process. A qualified solicitor will always be best able to provide this advice and assistance.
Cooling-off period? This is a time which runs for 5, 10 or sometimes more days (subject to the vendor agreeing) after the exchange. In this time you finalise your finance and also have inspections made of the property usually by a builder, a termite controller, and sometimes a land surveyor and the local council to check council compliance. During this time, if the finance does not come through for some reason, or if you discover something that you are not happy with about the property, you can get out of the contract on the basis that you forfeit your holding deposit, which is usually 0.025% of the purchase price.
End of cooling-off period. You must pay the balance deposit by this time. This usually 10 % of the purchase price. It is sometimes paid in the form of a cheque or as a ‘deposit bond’ (which can be used instead of an actual deposit if the owner agrees). A deposit bond is a guarantee issued by a large financial institution like a bank which says that if you do not proceed then the bank will pay the deposit on your behalf. After the cooling-off period ends you can not get out of the contract without forfeiting 10% of the purchase price and being liable for any other loss of the owner.
Transfer. Your solicitor prepares a Transfer document normally around two weeks after the end of the cooling-off period. This is the formal document transferring the house and land to you. This document is signed by the owner and handed over to either you or your lender if you are getting a loan at the settlement.
Government Inquiries. These are inquiries which are obtained from various government bodies (for example RTA, Transgrid, etc) to ensure that none of them have any plans or proposals which will effect your new home. They usually take about two weeks from the end of the cooling off period and you will be notified if there are any problems.
Mortgage and Loan documents. The lender or their solicitor will prepare a number of documents which you must sign. If necessary you will need to consult your solicitor about these documents to ensure you understand the full impact of the documents.
Settlement! You must do a final inspection of the house usually the night before or the morning of settlement. You are checking to make sure that the owner has not left the premises untidy, taken something that was supposed to stay, or damaged the premises since the exchange. The settlement process is the formal hand over of the property’s Certificate of Title and other necessary documents to you or your lender. It normally takes place in the city. Your lender or solicitor hands over bank cheques to pay the balance of the purchase price and receives in return the Title documents. These documents are kept by your lender as security for your loan or otherwise handed to you. After settlement the property is yours, and you are able to move into the property or otherwise deal with it as your own.