The steps toward buying your first home

Sure, buying a house can seem like a daunting process. But our jobs is to help you understand the process, who is involved and who is responsible for each step. Having this understanding can make the process a little less stressful for you and help you feel in control.

After checking in with a few of our clients who have made their first purchase recently, we have listed some of the key steps in the process that you should understand and plan for.

First up, getting ready to start looking

• It’s important to be talking to a medical or dental specialist lender who can help you – there are some very good arrangements available for Doctors and Dentists to allow you to get into your home sooner. These arrangements can include a lower deposit required to avoid Lenders Mortgage Insurance (we want to avoid this where we can as it eats into your capital). Thankfully, as a Doctor or Dentist there are measures to help you avoid this.
• Getting your finance pre-approved is important and can take a couple of weeks, however removes one of the roadblocks for making a successful offer.

When the market is ‘hot’, properties move fast and if you tell an agent you are pre-approved for Finance you are a better chance of having your offer accepted.

• When you engage with a bank, they will ask for a budget, so it is good to understand your expenses ahead of time.

Many of our clients use our CN Wealth App to track their expenses.

• Have a deposit target in mind and be working towards this before you start looking at houses. Talk to us about what kind of deposit you should be looking to save.

Who is involved in the process

• We all take advice from family and friends, and these are good allies to bump ideas from, but there are professionals who you should be talking to assist you
• A solicitor or conveyancer should be engaged to review the contract sale and point out any issues with the site such as council restrictions on your property. They can also help you take the emotion out of dealing with real estate agents during negotiations and making rash decisions.

The costs here can range from $1,000 to $3,000 but are a necessary risk management tool for you.

• A building and pest inspector can be engaged to highlight any issues with things like termites or structural defects. These can cost from $300 to $1,000 but are a very important step in the process.
• Buyers agents are also useful for taking the emotion out of the process. The role of these agents is to essentially take some of the burden of selecting a property that will be a good long term investment, and to handle some of the negotiations if you choose. Fees here can range from say $7,500 and up depending on the value of the property.

How does the offer / sale process transpire

• For an auction sale, the sale price is determined during the auction when there are no more bids.

At this time the contract of sale is signed and the deposit is paid and the house is yours. As you can tell – it is very important to have finance approval before going to auction!

• For a non-auction sale, generally you will submit an offer or two via the agent and once the conditions are accepted by both the vendor (sellers) and you, the contracts are ‘exchanged’, meaning the terms of the contract have been finalized and both parties are now bound by these terms.
• Your offer can include things like a price, a settlement period and being subject to satisfactory pest and building reports. These conditions can be useful to protect your interest, but beware that the more conditions attached, the less appealing it might be to a buyer as there are more roadblocks to them having an exchanged contract.
• The conditions are important, we want to take out as many road blocks as possible for your offer so the vendor can see you are ready to go. It’s just as stressful for the sellers as it is for you as a buyer.

The kind of ‘roadblocks’ that come up include where you still need to have finance approved, or if you need a valuation on the property.

How do you pay for the house and the deposit

Deposit

• The deposit is paid to the agent or solicitor. Most often this is a 10% deposit per standard contracts, however is usually able to be negotiated to a 5% deposit.

This deposit usually comes from you via bank transfer to a solicitor trust account.

• When the contracts are “Exchanged” that means you have entered the contract to purchase.

• Before settlement date, you will liaise with the bank to resolve the structure of your debt (i.e. things like fixed versus variable portions) so that it is ready on settlement date.

The Remainder

• On settlement date, the balance of the purchase price is due and the Solicitors will arrange (usually electronic) settlement via PEXA which is electronic communication between both seller solicitors, your solicitors and the respective banks who make the payments.

The bank will likely prompt you for this but it is also important to insure your interest in the property against damage or other loss.

As always please don’t hesitate to get in touch with one of our team should you have any questions or would like to start looking to buy a property.

In addition to specialist accounting and tax advice we also have specialist teams to assist you with attaining Finance and House / Landlord Insurance.

Get in touch with our team today if you'd like to discuss your circumstances