Today youre going to learn How to Buy a House.
(In 11 easy steps)
The best part?
You wont need to a massive deposit to secure your dream home.
In fact, there are THREE different ways of buying a home with no deposit.
And in this case study, Ill walk you through the step-by-step process to securing your house.
Lets get started.
11 steps for the best home purchase
- 1. Decide its time to buy
1. Decide its time to buy
Buying a house isnt easyIt can be a long process (sometimes taking up to 12 months) and can be expensive.
On the other hand, owning a house can be an incredibly rewarding experience.
It can help you build equity in a property, grow your wealth and give you security in owning your own place.
The first step in all of this is just deciding if its time to buy, if its time to invest in property or if its better to keep renting.
Should I buy or should I rent? The benefits of each.
Realistically there is no right or wrong answer for anyone, it is up to your personal preference
But the first step to buy a house is deciding you are ready to buy!
With that being said, if you live somewhere where property prices are unaffordable for you there is another strategy which you can consider called Rentvesting.
This is where you buy where you can afford, and live where you like.
Giving you the best of both worlds.
2. Find a home loan that works for you
In the old days, there was only one type of home loan so you didnt have any choice in what kind of loan you got.
Nowadays there are literally hundreds of home loans available in Australia all with different features and benefits.
At this point, it is good to speak with a Mortgage Broker.
A Mortgage Broker works on your behalf to arrange a home loan through a bank.
They look at what you are wanting to achieve and find a home loan that works for you.
Not only this a Mortgage Broker will also help you work out a price range and budget (also including costs like stamp duty) for you to buy a home and give you an idea on what you can spend.
Your mortgage broker can also explain other benefits you might be entitled to like the first home owners grant.
How do I buy a home with no deposit?
As I said above, there are currently THREE different ways to buy a home with no deposit.
- 1. Guarantor Home Loan Buying a property with your parents as a guarantor lets you borrow up to 105% of the purchase price! This means you don’t need any savings as your parents provide a guarantee secured on their property.
- 2. Gifted Funds If you have a family member or relative who is willing to give you the deposit, you can buy a home effectively with no deposit!
- 3. First Home Buyers Grant (Great Start Grant in Queensland) In Queensland, you can purchase a brand new property or build a new home and receive $15,000 from the government which can be used towards your deposit plus stamp duty benefits.
Example of a typical guarantor home loan structure
3. Get a pre-approval
A pre-approval is a preliminary loan approval from a bank letting you know what you qualify to borrow.
To get a pre-approval you just need to give your credit history to your broker or lender who then will verify your income and give you fairly clear guidelines on what you can afford to borrow.
In effect, it’s like the lender is telling you that they will lend you $X amount of money provided your income and personal circumstances don’t change. This allows you to make stronger offers on the property with shorter finance terms, meaning you can get a better deal and into the home of your dreams sooner!
How a pre-approval can save the day.
Beware! Not all pre-approvals are reliable.
Not all banks are the same when it comes to assessing a pre-approval home loan, also known as a conditional approval, indicative approval, approval in principle or home seeker depending on the bank you use.
In most cases a pre-approval is just an indication that the bank is ok to consider approving your loan, they may just complete a credit check and not check any of or your documents and wait until you lodge a full mortgage application to do this.
Not all pre-approvals are reliable, so make sure you ask your Mortgage Broker a few more questions.
4. Find the right house
Having a pre-approved loan allows you to think ahead and plan your property search wisely.
Create a list of essential features that you look for in a house in Brisbane. This will keep you focused on purchasing a home that is suitable for you and meets your requirements.
Property can be a largely emotional purchase, so you need to consider a few things before falling head over heels on a property:
- What is your “why” for buying this property? Is it to live in, are you going to rent it out in the short term, what is the properties main purpose?
- Do you plan on staying in the property for a few years? Your first home is not likely to be your forever home, it is just your first step towards your future mansion!
- Can you afford repairs and upkeep on the property? If it is an older Queenslander style property have you budgeted for ongoing repairs and maintenance? Will it need a new kitchen and bathroom in the short term?
- If you bought the property, who would buy it from you in a few years? I like to start with the end in mind, when buying a property I always think about who I will sell it in a few years. If it’s going to be a very narrow market like retirees, is this going to harm the growth potential of the property?
House Buying property checklist.
Regardless of what you intend to buy, carrying out market research is really important to identify the right price and reasonable quality of a product.
Because purchasing a home is a huge investment, you must conduct local market research to find out the current prices of a type of property you are looking for, as it will enable you to avoid paying above the market value.
The Flood Awareness Map lets you know what the history of flooding is at your property and is an important tool to use.
- Read More:How to Research your suburb and surrounding areas?
- Read More: How to flood check a property in Brisbane for free!
6. Complete your property inspection checklist
There is no substitute for physical inspection when it comes to purchasing a home.
It allows you to see other attributes that you would have otherwise ignored while searching for a property, such as its locality.
Using a property inspection checklist can help you make sure the property ticks all of your boxes!
Whenever you plan to visit a property, plan a building and pest inspection before making a purchase as it will disclose the problems beforehand that would otherwise be costly to fix.
7. Make an offer
Now the exciting part.
You do not need to sign a contract of sale to make an offer on a property, I get my offer accepted by the agent (and the sellers) before taking time to fill out the contract of sale.
You do not need to sign a contract to make an offer on a property
I have personally used this template to purchase properties in the past, it’s worth keeping your offer short and to the point including:
- Purchasing Entity: I.e. your full name, including middle names.
- Finance and building and pest terms
- Settlement Dates
- Lawyer details
8. Questions to ask before signing the Contract of Sale
Ok, so youve made it this far but
Do you even know what the Contract of Sale is?
The contract of sale is a legal agreement that contains terms and conditions agreed upon by both the seller and buyer in a clear manner.
It is prepared by a lawyer or in Queensland by a real estate agent and typically includes the following:
- �� Name and address of the seller
- �� Plan number, reference number, and address of the property
- �� Fittings and removable items, such as appliances, blinds, or any other easily removable items, included in the sale
- �� Deposit amount and purchase price of the property
- �� Details about the settlement
- �� Information about the property as to whether it is vacant or on lease
- �� Sometimes includes reports, such as building inspection, pest inspection, etc.
It is very important to look at the terms and conditions of the contract before signing it as it may involve special conditions that aren’t in favour of the buyer.
Keeping that in mind, the following are five questions you should ask before signing a contract of sale:
Ask these 5 simple questions to the Real Estate agent before signing your contract of sale
Question 1: Are You Getting What You Are Looking For?
In a real estate market, buying a property doesn’t always go as planned. There are a lot of things you have to consider and at times, you have to come to a compromise. What you can do, however, is look at the copy of the registered plan that is normally attached to the contract and check if the property description is the same as inspected. If something doesn’t seem right on the plan, hire an independent surveyor to inspect the property and prepare a plan.
An unregistered or registered easement is what you should be looking at next. If the house has any easements, there might be restrictions as to how you should use that portion of the land.
As discussed earlier, it’s important to get a clear idea about the fixtures you will be getting along with the property. This is things like light fittings, carpeting, pool equipment, stove, blinds, or curtains. Clearly ask what is included in the contract of sale, because it is not right to assume that everything you saw during the inspection will be included in the sale.
The deposit in Queensland is split into two parts on the Contract of Sale, (1) the holding deposit and (2) the balance deposit. Both need to be paid for the contract to become unconditional.
Question 3: Does the Contract of Sale Involve Any Special Conditions?
As discussed, you should definitely ask about any special conditions included in the contract of sale, because these are the things you should be reading over and over again to get a clearer picture. An example of special conditions can be anything from paying a penalty to delay the settlement to a transaction being subject to tenancy.
As a buyer, you can also include special conditions in the contract, such as a satisfactory report of pest or building inspection, or sale are subject to selling your own property.
Termites are surprisingly common in Brisbane homes, so you can add a building and pest condition to give you time to get a report completed.
Question 4: How Long is the Settlement Period?
It is crucial to choose a reasonable settlement period, keeping in mind your particular situation. For example, if you are in the process of selling your house and want to move to a new home by a particular date, it’s important to negotiate the date that is suitable for you.
Normally, the settlement date can be 30 days, 60 days, or 90 days. Some sellers might not want to go with the longer settlement period while others may not want a shorter period. So consult with your real estate agent as to what the motivation of a seller is.
Typcially settlements in Queensland are 30 days from contract signing, but you can extend this to 45 or 60 days depending on your situation (and the sellers willingness to accept it!)
Question 5: Does the Purchase Involve Cooling Off Period?
The cooling off period is mentioned in the contract of sale. You must be aware of what can happen if you plan to withdraw from the contract after signing it.
Also, find out about any financial penalties in case of withdrawing from the contract.
Once you have paid your deposit on a property, you have legal right over the property called a financial interest Make sure you get your insurance sorted ASAP.
Buying a property comes with huge financial responsibility. Therefore take your time, carry out due diligence, and make sure the terms and conditions are satisfactory. Speak to our team of experts today for more information.
9. Follow the home buying steps
Once your offer has been accepted its time to sign the contract of sale and get moving with your unconditional finance approval.
From here the home buying steps are:
Home buyers in Brisbane need to engage a lawyer early in the process if they are wanting to go to auction.
10. Sign your loan contracts
Once you have taken all the above-mentioned steps, a copy of the signed sale contract will be forwarded by the broker to a lending institution where arrangements are made for the property valuation.
If the result of the valuation is fine and other loan terms have also been met, the lender will grant full approval of a loan.
This is where your broker and solicitor come into play as they transfer the property into your name and make sure the settlement takes place within a specified period.
After successful completion of the entire process, all you have to do is pack your belongings and wait for settlement (which typically takes 30 to 90 days).
Now you are at the easy part, signing the paperwork!
11. Move into your new house
Woo you made it! Time to arrange the movers and get the keys because you are now a homeowner!
Time to invite the family around to your new castle!
Bonus Tip #1: Make a List of Recommended Solicitors
You would need the services of a conveyancer or solicitor to take care of the legal matters.
They review the contract or sale of any property you wish to buy and handle the settlement process. Therefore, always make a list of good solicitors recommended by colleagues, family, or friends when you are purchasing a home.
Hunter Galloways tip: Ask us for advice on this one!
Bonus Tip #2: Attend the Auctions or Purchase a Property Privately
Once you are ready to make an offer or bid at an auction, you must be ready to pay the deposit.
Bear in mind that if you bid at an auction, there is no turning back from the contract.
But if you are purchasing a home privately, you may be able to get a time period during which you can cancel the purchase transaction. However, once you pay the deposit money, you’re entitled to the property.
Being prepared is half the battle when going to auction!
Bonus Infographic: Step-by-step guide to buying a house
As an added bonus, we have detailed the home buying process in as much detail as possible. You can use this as a checklist to help you go from finding to settling your new home.
Next steps for home buyers looking for information
Our team here at Hunter Galloway is here to help you buy a home. Nathan & Joshua Vecchio are Senior Mortgage brokers who specialise in making your home journey easy.
The Hunter Galloway Mortgage Broker Brisbane team is here to help. We have a team of home loan experts.
Unlike other mortgage brokers who are just one person operators, we have an entire team of experts to help make your home loan journey as simple as possible.
Find more home buying information here or please get in touch here and we can book a time that suits you – either a phone call information session or a face to face meeting.
Home Buyer Further Reading:
Ready to take the next step toward buying? We’re happy to help. Schedule a call today with a Home Loan Expert from Hunter Galloway, the home of home buyers.