Aussie First Home Buyers Guide

8/22/2019 Aussie First Home Buyers Guide

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irst home

buyers guideplanning on purchasing your frst home?Where do you start?

Let Aussie help you take the rst steps to becoming

a home owner for the rst time by reading our rst

home buyers guide.

put yoursel in a better place

www.aussie.com.au/home-loan/frst-home-buyer-guide Call 1300 44 55 66
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www.aussie.com.au/home-loan/frst-home-buyer-guide Call 1300 44 55 66

contents

page

1 - 11 Thinking

12 - 18 Looking

19 - 28 Finding

29 - 34 Moving
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Moving from rentingto owing

Saving and

your deposit

Choosing the right loan

and considering the costs

Understanding

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ThinkingThere are advantages and disadvantages to both

owning and renting. But ultimately, the decision will

come down to your individual circumstances.
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Moving rom renting to owning

Which is better: owning vs renting

There are advantages and disadvantages to both owning andrenting. But ultimately, the decision will come down to your

individual circumstances.

Here are some things to consider:

Rent Own

If the value of the property rises,

you may have to pay more in rent

If the value of the property

rises, youre likely to make a

prot if you sell it

Building maintenance is your

landlords responsibility

You need to budget for

building maintenance

Your rent is xed for a relatively

long period of time

Your repayments may uctuate

with interest rate changes

Youre paying off

someone elses mortgage

Your property is likely to be an

appreciating assetand could

become an investment property

in the future

Your monthly rent payment may

be less than mortgage repayments,

especially if youre sharing

Your mortgage repayments may be

more than your rentbut you can

also view this as a form of saving

You dont have any control beyond

the term of your rental agreement

The property is yours to live

in as long as you want to

Youre limited in the changes you

can make to the property

Generally you can do

anything you like with the dcor

and outdoor areas

Rent Own

Generally youre not locked into a

long-term commitment, and can

move out at short notice

It takes longer to sell a property,

so you have less freedom to move

Someone else owns the property Its a place of your own

Purchasing your rst home is one of the most exciting things

most people do. Its also a complex process, especially for

rst-timers. But the result is invariably worth it, and if the value

of your property rises, youll have a valuable appreciating asset

on your hands.

Should you buy with someone else?

If you cant afford to buy your own home, you might bethinking about buying a house or apartment with a friend

or relative. Its known as co-borrowing and its a small but

growing trend.

Things to consider in relation to co-borrowing:

Your buying power may be higher with more than one

person involved and may give you access to a greater

range of properties.

It can be quicker to raise a deposit, and you may be able

to put down a larger deposit. It may be easier to meet the repayments with two salaries,

which gives you both a bit more exibility.

Important to note that even if both parties are eligible for the

First Home Owners Grant, only one can be used.
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The key to success is having a strong relationship with the

other person, an equal 50/50 share in the property, and a

legally-binding contracteven if you are going in with a

family member.

This contract needs to cover things like:

Maintenance

Payment for damage

Capital gains liability

A contract is also essential because if one person defaults on

a loan payment, the other person is often liable. And the default

can be innocuous: it could come from someone losing a job or

their income from investments, or becoming too ill to work.A contract also becomes critical if there is a breakdown in

the partnership and one of the parties decides to opt out.

So seek legal advice and make sure youve got all the key

elements covered if youre thinking of co-borrowing.


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Saving and your deposit

Your credit record is more important than

you think

If youre planning to buy a house, its a good idea to check

your credit le. Because when you apply for a home loan,

lenders will be casting their eyes over it too.

Theyll be looking up:

Obvious personal details such as your name and current

address, your employment details, and directorships.

Credit applications youve made in the pastsuch as for

credit or store cardsand to see if youve defaulted on

payments, or have an infringement to your name.Over time, your credit records are updated and deleted.

Applications and defaults disappear after ve years, and

serious infringements and bankruptcies go after seven years.

You can nd out more information on how to check your

credit report on theAustralian Securities and Investments

Commission website.

If you live in Tasmania you should also contact theTasmanian

Collection Service.

Why you need a deposit

When youre looking for your rst home, you need to know how

much you can afford to pay off each month on your home loan.

That will help determine the size of the loan you can get, and

therefore what property you can buy.

The deposit that you can put down is just as important.

Heres why:

100% loans typically no longer exist

Generally its no longer possible to get a loan for the whole

of the purchase price. Most lenders will want you to put down

at least 5% of the purchase price of the property. The rest

generally up to 95%can be nanced using a home loan.

You get access to lower interest rates

If you can put down a deposit of 10%, this will often get you

a lower interest rate on your loan, because there is less risk

involved for the lender.

Avoid paying Lenders Mortgage Insurance

If you can put down a deposit of 20%, you might be able

to avoid paying whats known as Lenders Mortgage

Insurance (LMI).

Pay less in the long run

The more you can put down as a deposit, the less youll have

to borrow. That means youll pay less in interest over the

lifetime of the loan, and your repayments will be lower over

a set term. Use this Loan Repayment Calculator to see the kind

of difference it makes.

More loans to choose from

A bigger deposit also means youll get more loans to choose

from. Which makes it easier to get a good deal on the right

loan, and save even more in the longer term.
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Something for nothing:

the First Home Owner Grant & Boost

The First Home Owners Grant (FHOG) is great news for rst

home buyers. Its a one-off, tax-free $7,000 payment to peoplebuying a rst home in Australia.

Heres the small print:

You must be an Australian citizen or permanent resident

buying or building your rst home in Australia.

The property you buy must be a recognised house, unit

or at specically designed for people to live in.

You or your partner must not have purchased in

Australia before.

You must occupy the home within 12 months of

settlementor within 12 months of building completion

if its a newly built home.

You must apply for the grant within 12 months of settlement

or building completion.

Contracts must be exchanged between the buyer and

seller before the cut-off dates, and the money is paid at

thetime of settlement.

The FHOG is a good chunk of money, and lenders will

consider it as part of your savings and deposit.

How to get the FHOG

The state and territory governments hand out the grants on

behalf of the Federal Government. Some also offer additional

bonuses for rst home-buyers, like stamp duty concessions andextra money.

Ask your broker or lender about the perks and lurks that you

should know about, or take a look at the website of the revenue

ofce in your state or territory:

ACT | NSW | NT | QLD | SA | TAS | VIC | WA

More good news: First Home Saver Account

If youre a rst home buyer, the First Home Owners Grant isnt

the only nancial bonus you can get.The Federal Government will also add extra dollars to your

savings when you set up arst home savers account.

Every year, it will contribute 17% of whatever you put in

up to $850and give you a tax break on the interest.

Weve created acalculatorto show how you can build

a healthy deposit using one of these accounts.

The ip side of this is that you cannot withdraw the

money for any purpose except to buy your rst home.

If your circumstances change and you decide not to

purchase a property, youll need to transfer the balance

into superannuation and close the account.
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What is pre-approval and why do you need it?

You dont need to nd your new home before you can

apply for a loan.

Its actually better to get your loan sorted beforehand.

Youll know exactly how much you can afford to pay for

a property.

Once you nd the right property, youll be able to focus on

the purchaserather than having to sort out the nance at

the same time.

Youll have a better idea of what properties to look for,

because you wont waste time looking for something outside

your price range.

With a pre-approved loan, there are fewer chances of hiccups

with the sale process.

Sometimes, sellers will accept an offer below list price, because

they have peace of mind that the property really is sold. The

seller can take the property off the market with condence

knowing the buyer is serious.

If you decide to make an offer youll be in a position to move

quickly if your nances are sorted this will help you avoid

beinggazumped.

Getting your loan pre-approved can make sense from both a

peace of mind and time management point of view but speak

to your broker or lender to work out the best option for you.

What are the costs to consider?

Before you apply for a home loan, you need to gure out

how much you can afford to pay each month.

Dont forget the extra costs

The real amount you can afford in repayments is affected by

your lifestyle and other commitments, such as other loans you

may have. It will also be affected by the ongoing costs involved

in owning your own home, such as:

Land and water rates Electricity and gas

Strata charges

General maintenance

To get an accurate grip on these gures, youll need to do a

budget. This will show what your expenses (outgoings) currently

are, and how much you have left over from your income.

You can also get an idea of how much a typical lender would be

prepared to lend to you by using ourBorrowing Power Calculator.

Then use theLoan Repayments Calculatorto work out what

the monthly repayments would be on various gures.
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Youll then have a pretty good idea of the costs involved in

taking out a home loan, and how much you can afford without

overstretching yourself.

Other costs to factor in

When youre buying a property, there are also costs associated

with the purchasing process. Youll need to budget for:

Stamp duty

Pest and Building reports

A strata search (usually if youre buying an apartment)

Conveyancingcosts (the legal fees)

Loan application fee

Insurance, which could include Lenders MortgageInsurance and your own Mortgage Protection Insurance as

well as property insurance

To get an accurate understanding of these costs, its a good

idea to meet with a broker or your lender early on. Youll then

know what to expect, and can budget accordingly.

The two types of stamp duty youll pay

Stamp duty is a tax that you need to budget for when buying

your rst home. There are two types you need to be aware of:

Duty paid on the transfer of the property to you.

Duty paid on the mortgage you take out to pay for

the property.

Stamp duty is charged by the state and territory governments,

and the amount will depend on where you buy the property.

It will also vary according to the purchase price of the property.

The good news is that rst home buyers qualify for some

stamp duty concessions. For more information take a look at

the website of the revenue ofce in your state or territory:

ACT | NSW | NT | QLD | SA | TAS | VIC | WA

You can also calculate how much duty youll need to pay

by using our handyStamp Duty Calculator.

The 5 different loans youre likely to meet

There are hundreds of different loans out there in the

mortgage marketplace. But fundamentally, they are allbased on two things:

Principal the amount of money you borrow.

Interest how much you pay to borrow the money.

Its calculated on the outstanding principal.

The differences youll come across are the type of loan and

the type of features that come with the loan. Here are some

of the most common types of loans youll nd.

Fixed loansInterest rates and repayments are xed for a set period, usually

between three to ve years. This makes it easier to budget.

Find out more about xed loans.
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Variable loans

This is the most popular type of loan in Australia. The interest

rate (and your repayments) will vary throughout the term of the

loan, so they may rise or fall. The rates are usually lower thanxed rates.Find out more about variable loans.

Split loans

This loan can give you the best of both worlds. You x one part,

and let the other part vary according to market uctuations.

Find out more about split loans.

Low-doc loans

These loans are mostly for self-employed people who dont

have all the nancial documents normally required to get aloan. A low-doc loan can be either xed or variable. The rate

is generally higher than a standard variable or xed loan, but

this is usually reduced after a few years if your repayments

are on time.

Line of credit

This type of loan allows you to draw from a xed amount at any

time, to pay for whatever you wantwhich could be shares,

renovations, or even a holiday.

Its like having a credit card with a big limit, but your home stillacts as security for the loan. You only pay interest on the funds

you use, but you need strong nancial discipline to ensure you

pay off the principal as well as the interest.


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Decision: xed, variable or split loan?

There are several different types of loans, but many rst home buyers choose either a xed or variable rate loan. If you want the best

of both worlds, you can hedge your bets and borrow a portion of money in a xed rate loan, and a portion in a variable rate. Thats

known as a split loan.

To help you decide which loan would be right for you, here are the pros and cons of xed, variable and split loan types:

Fixed rate Variable Split

The available interest rates are likely to be slightly

higher than the variable rates on the market

Your interest rate and repayments are likely to be

slightly lower than a xed rate at any given time

One part of your loan will be xed and the other

can uctuate with the market

Your repayments will stay the same for the

xed period of the loan

Your repayments may uctuate with interest rate

changes, this could be up or down so you will

need to factor in a buffer

Interest rates can go up and affect

the variable part of your loan

Fixed repayments make iteasier to budget You could pay off your loan faster by making extrarepayments Allows you to have interest rate securitywith repayment exibility

If you break the loan (perhaps by selling the

property) during the xed term, youll probably

pay exit fees

There are unlikely to be any exit fees Most lenders wil l let you set the portions

on how it suits you

You cant usually make extra payments or

re-draws without penalty.

You can make extra payments whenever you like You can access variable loan features like redraws

and extra payments but have a little more

certainty around your long-term budget

The above are typical examples of the various types of loan features. Each loan has its own specic feature, so check your loan carefully..


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Understanding Mortgage Broking

Do you need a mortgage broker

A mortgage broker can be a very useful partner for a rst homebuyer. The broker will assess your nancial situation as part

of a needs analysis, and match your requirements to a wide

range of loans from banks and other nancial institutions;

managing the process right through to settlement.

Here are some reasons you might consider using a broker:

Brokers will offer loans from lenders they are accredited

with, known as their panel of lenders. These lenders may

include the large banks, plus specialist non-bank lenders

and mortgage managers.

A broker will search for a deal that meets the customers

needs, from their panel of lenders. This provides access to a

large range of loan options without the customer having to

do any of the leg work.

A broker has access to loan rates at his ngertips, as well as

fees and charges so a clear loan comparison can be made.

Brokers also have good relationship with lenders so can

usually negotiate a very competitive rate. Lenders receive a

signicant amount of business through the broker channel

so its in their best interest to work closely with brokers.

The brokers experience in the mortgage industry will help

you make informed decisions and allow you to feel condent

throughout the process.

The best news is that generally you wont need to

pay your broker: the broker gets an upfront commission

from the lender on the loans they settle as well as

a trailing commission.

Bear in mind that not all brokers have the same level of

qualication or experience. TheMortgage & Finance

Association of Australia (MFFA)sets the highest industry

standards and its members are required to adhere to a range

of Code Practices, laws and regulations. To nd an accredited,

reputable broker, contact the Mortgage & Finance Association

of Australia.

What to expect when you meet with a broker

Will usually take around an hour, and in that time, a qualiedbroker will:

Ask what you are looking for in a home loan and understand

the particulars of your situation

Calculate how much you can borrow and what your

repayments will be so youll know what sort of range

you can buy in.

Help you choose the loan and associated features that

meet your needs from a panel of lenders.

Explain the application fees and other charges associated

with a loan.

Explain the home buying process end-to-end including

making an offer, getting legal advice, exchanging contracts

and settlement.
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The broker can also take you through some helpful

information like:

What isLenders Mortgage Insuranceand will you have

to pay for it?

If you qualify for theFirst Home Owners Grant, how can

you access it?

How you could save by consolidating your debts?

The broker will walk you through the application for the

loan of your choiceif and when you are ready. Most loan

applications can be lodged online, but youll need to have some

documentation and information handy for the broker to see.

Thedocuments youll needwill depend on the type of borrower

you are, and the type of loan youre after. Your broker will tell

you what you need to submit to the lender youve chosen.

You should feel informed and condent in the next steps in the

process when you leave your rst appointment. And the good

news is, the broker will be with you every step of the way so

you never have to worry.
http://www.aussie.com.au/home-loan/first-home-buyer-guide/overview.htmhttp://prevpage/http://www.aussie.com.au/home-loan/mortgage-broker/documents.htmhttp://www.aussie.com.au/home-loan/mortgage-broker/documents.htmhttp://www.aussie.com.au/home-loan/mortgage-broker/documents.htmhttp://www.aussie.com.au/home-loan/mortgage-broker/documents.htmhttp://www.aussie.com.au/http://prevpage/http://www.aussie.com.au/home-loan/first-home-buyer-guide/overview.htm


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Should you use

a buyers agent?

Buying your rst home &

real estate agents

The critical

property checklist

Questions to ask whenyouve found a property

How old is that building?

The 7 costly mistakes to

avoid

Finding

Moving

LookingA buyers agent assists people who are buying

a property. They are becoming more common

in Australia, and for good reason.


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real estate agents

The critical

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avoid

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Should you use a buyers agent

A buyers agent assists people who are buying a property. They

are becoming more common in Australia, and for good reason.

You may get access to more properties, including those that

arent advertised, through the agents contacts and network.

You can make better use of your time. Instead of searching

the newspapers and internet every weekend, someone else

does the hard work shortlisting suitable properties.

Youll have a professional negotiator who can help obtain

the lowest possible price. This can be handy when it comes

to Auctions.

Youll eliminate wasted time from being shown inappropriate

and unsuitable properties by real estate agents.

Many properties sold are silent sales that are never publicly

advertised. A buyers agent can help you nd these.

The agent will usually charge a fee up front, and may also

take a small percentage of the property purchase price. For an

all inclusive service you may be looking at around 1% of the

property price.

You should check this beforehand, and also check that the

agent is licensed and does not accept sales commissions from

vendors or developersif they do, they are not acting entirely

in your interest.

A good place to nd a buyers agent in your area and get an

idea of fees is theProperty Buyers Agents Association of

Australia.
http://www.aussie.com.au/home-loan/first-home-buyer-guide/overview.htmhttp://www.pbaaa.com.au/http://www.pbaaa.com.au/http://www.pbaaa.com.au/http://www.pbaaa.com.au/http://www.pbaaa.com.au/http://www.aussie.com.au/http://www.aussie.com.au/home-loan/first-home-buyer-guide/overview.htm


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Buying your rst home

& real estate agents

The critical

property checklist




avoid

Finding

Moving

Buying your frst home & real estate agents

Estate agents are effectively salespeople acting for the buyer,

and the agents objective is to sell a property to you for the

highest possible price.

Follow these tips and tricks to make sure you stay on top of

everything related to buying your property:

Keep your cards close to your chest

The one thing the estate agent wants to know is how much

you like a property. It can give them extra bargaining power at

negotiation time. So it can be a good idea to down play how

much you like the property, especially if youve got your heart

set on it. Act cool and keep your excitement to yourself.

Do your research

Find out how much other properties in the area have sold for

recently. Go to auctions and learn as much as you can about

local property market trends. This is essential for two reasons:

rstly, youll know what a reasonable market price is for the

property you like, and secondly, you wont waste money by

going in too high.

Give yourself room to move

When you make an offer, pitch it below the price youre actually

prepared to pay. Very few properties sell for the price initially

offered, but many sell for a price just above the rst offer.

Dont take rival buyers for granted

Sometimes an agent will say theres a higher offer on the

table than the one youve just made. Unfortunately theyre not

obliged to disclose the higher offer and you wil l need to decide

whether to make a counter offer.

Put your offer in writing

Estate agents are obliged to submit all offers to the seller, so

make sure that yousubmit your offerin writing. This formalisesyour offer however be aware that the vendor can still accept

a higher offer from someone else. The offer and acceptance is

only complete once contracts have been exchanged.


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The critical property checklist

What are you looking for in your rst home? Having a clear idea

from the start will save the amount of time you spend searching

on the net and staring in real estate agency windows.

Here are some things to tick off on your mental checklist:

Location

How far are you willing to travel to get to work?

How good are the local schools, shopping centres and other

public facilities like parks and sporting grounds?

How convenient is public transport?

If youre prepared to renovate, think about that other real

estate clich thats stood the test of time: Pick the worsthouse in the best street.

Make a list

What do you like about where you currently live?

What dont you like about where you currently live?

or really need?

What are the essentials: balcony, laundry, garage, views etc

Do your homework

Check out recent home sale prices and auctions in yourpreferred areas. Look at market trends, houses for sale and

suburb statistics.

Get home loan pre-approval

It can be heartbreaking to nd the perfect place only to learn

that you cant afford it. Even worse is losing your deposit

because you won at an auction but couldnt secure nancefor the balance of the purchase price. Dont risk it.

Take notes and use checklists

Turn your priorities into a personalised home-shopping

checklist and use it to track the features of each home.


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Questions to ask when youve ound a property

If you know the vendors reason for selling a property youre

interested in, it can help you in your negotiations. Estate

agents often advise their clients not to give a reason for selling,or to simply say relocation. But there is no harm in asking,

either directly or indirectly.

Sometimes an estate agent will let slip that the vendor has

already bought elsewhere, or needs to move for their job. Reasons

such as these suggest that the vendor will be looking for a quick

salesomething that you can factor into your negotiations.

Other questions that will help rst home buyers are:

When does the vendor need to move out of the property?

How long has the property been on the market?

How many offers have been made on the property?

Has the property been passed in auction (and if so, what

was the highest bid?)

Is the vendor open to offers before Auction?

How long have they owned the property?

The answers you get to these questions will obviously give you

an insight into how negotiable the price is.

Some other questions for apartment hunters:

Is the property Foxtel enabled?

Does the apartment above have oor boards?

Does the body corporate allow BBQs on the balcony?

Is there much noise in the building?

What % are tenants vs. owner occupiers?

Is there visitor parking?


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real estate agents

The critical

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How old is that

building?


avoid

Finding

Moving


Its tempting to view properties as commodities: when youre

looking at lists of recent sales, youre correlating location with

price and facilitiessuch as the number of bedrooms andbathroomsand perhaps the oor area, and size of the land.

The quality of a property is harder to assess, and it needs to

be taken into account. If its an older property the

construction quality will be critical, from weathersealing on

the roof to the condition of the external walls and whether or

not any structural faults (such as cracks) have developed.

An older property is not necessarily a bad thing: many older

buildings have higher levels of craftsmanship, and if theyre

built using brick or stone, are inherently strong.

The key with these properties is to ensure that they have

been maintained well over the years: the last thing you want

after taking out a mortgage is to nd that youre going to be

hit with expensive repair work.

Thats why its a good idea to get a building and pest report

commissioned before you start negotiating on price. If there

are no faults, thats good news. If faults do appear, you can

use the reports to reduce the price youre prepared to offer.

The minutes and budget forecasts in the property strata

report can also be a useful source for uncovering potential

building problems. Building and pest inspections mean you

can buy with condence


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real estate agents

The critical

property checklist


How old is that

building?

The 7 costly mistakes

to avoid

Finding

Moving

The 7 costly mistakes to avoid

These are the most common mistakes that rst home buyers

make. Make sure you dont fall into these traps:

1. Changing jobs or making a major purchase at the same

time as applying for nance.

2. Not getting your nance pre-approved, and leaving

everything too late when the right property is found.

3. Borrowing right up to the amount the lender is prepared to

loan you, and then getting over-stretched nancially.

4. Letting emotions take over in the negotiation process, and

paying too much for the propertyor missing an opportunity

to negotiate more favourable purchase conditions.5. Not checking out things such as council zoning, building

approvals and restrictive covenants.

6. Buying a do-up and then running out of money.

Renovation is not a cast-iron route to riches, and if it turns

out to cost more than you bargained for, you could be living

in squalid circumstances for too long.

7. Forgetting to sort out property insurance well before you

move in, and forgetting to tell the utility companies.


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Finding

What is conveyancing

How to make an

offer - private treaty

How to handle an auction

How to handle a

private sale (no agents)

Steps to buying

your chosen property

Knowing the cooling

off period

Do you need insurance

What is settlement?

Moving

FindingBuying a property is an emotional process, and its best

to keep those emotions under control at all times.


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How to make an



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Knowing the cooling

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What is settlement?

Moving

What is conveyancing?

Conveyancing is the legal process you go through when

buying a property.

Aside from legally transferring ownership, conveyancing

can help you to identify and avoid potential problems with

a property.

The role of the conveyancer includes:

Giving advice on the property contract

Facilitating searches on strata reports

Ordering any pest and building inspections

Arranging for the exchange of contracts for sale

Negotiating with the vendors solicitor on the buyers behalf

Arranging the settlement process and dealing with any

difculties that arise during the settlement period.

When choosing a conveyancereither a solicitor or a specialist

conveyancing companymake sure you know exactly what

service they are offering, and what their qualications are.

A low price can mean that the service is just the legal

minimum of lling in the forms. Whereas a more expensive

quote could cover advice throughout the process.


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How to make an



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Knowing the cooling

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What is settlement?

Moving

How to make an oer - private treaty

Most real estate agents will list the price of a property at

around 5-10% higher than the gure the vendor has in mind. In

theory, you should have an educated guess at the pricethe vendor wants, and then pitch your own offer at some

point below that.

Some other tips to consider:

If you have time, it may be worth getting a professional

valuer to value the property. Check with your chosen

lender to ensure that the valuer you use is one who is also

acceptable to the lender.

When youve arrived at a gure, put your offer in writing to

the agent. Specify how much you are willing to pay, and

any conditions that you want to attach to the offersuch as

repairs required, the deposit you will put down, and perhaps

a timeframe for moving in.

The real-estate agent is then obliged to pass this offer on to

the vendor. Youll just need to sit back and await a response

at which point, the negotiations will probably begin.

Examples of how to make an offer

Please see below an example of how you might consider

wording your offer. Important to note that the actual wording

should be determined by your individual circumstances andthe below treated merely as a guide.

Dear {Real Estate Agent}

Further to our inspection yesterday and review of the contract

we would like to place a formal offer of AUD $$$$ for the

vendors consideration on {property address}.

This offer is subject to:

1. Legal review of the contract and strata report;

2. Property valuation; and

3. Any other requirements as necessary.

As we are in a position to move quickly, we are also happy to

discuss earlier settlement timelines with the vendor.

Should you have any queries or feedback please contact me on

ph xxxxx or email xxxxxx

Regards, {Name}


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How to handlean auction

How to handle a


Steps to buying


Knowing the cooling

off period


What is settlement?

Moving


Buying a property is an emotional process, and its best to keep

those emotions under control at all times. This is hardest in the

pressure-cooker environment of an auction situation.

If youre competing against another buyer who has their

heart set on the property, this can drive prices up to an

extraordinary level. On the other hand, its possible to pick up

a great bargain. Its this element of risk and uncertainty, plus

the theatrical aspect of the auction process, that adds to the

emotional overload.

Here are some tips you could consider if youre likely to be

involved in an auction:

Attempt to purchase the property before it goes to auction.

That way, you can use your knowledge of the market and

the vendors circumstances to swing the process in your

favour. After all, the vendor will be nervous before the auction

too, and may be tempted to accept a reasonable offer and

avoid the uncertainty of the auction process. (Tip: the only

downside to this approach is that if the auction goes ahead,

youve indicated how much youre prepared to pay).

Go to a couple of auctions on properties that youre not

intending to buy. Observe the process and the way theauctioneer runs the show. Take note of the strategies

employed by those who are successful.

Before the auction, get your solicitor to check the contract

and strata report. Check with your lender that youre

covered and make sure youve receivedpre-approvalon

lender letterhead before the auction.

Make sure youve had the necessary inspections done on

the property, because when the hammer falls, the winningbidder is legally obliged to purchase the property.

Check the terms and conditions that come with the property

sale. If you want to change these, make a request. You dont

need to accept the terms laid out, and equally, the vendor

doesnt need to accept the changes youre requesting. But it

is always worth enquiring.

Before the big day, in your mind, set the absolute maximum

price youre prepared to payand stick to it in the heat of

the auction. Winning bids are usually just over a round gure,so bear that in mind. Its the little bit extra that knocks the

opposing bidder out of the game. TIP: Deposits required on the

spot are usually 5-10% of the purchase price but need to be

negotiated before auction. Its a good idea to have the deposit

made out to 5% or 10% of your maximum price to ensure you

dont go over your limit during the bidding.

If you think that this sounds like a stressful process for both

the buyer and the seller, youre right. And if youre not sure of

your abilities to handle that stress, consider getting aBuyers

Agentto bid on your behalf and advise you in the run-up to theauction.


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Knowing the cooling

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What is settlement?

Moving

How to handle a private sale (no agents)

Some sellers prefer not to use a real-estate agent, and will

attempt to sell their property themselves. They may have had a

bad experience with an agent in the past, or theyre unwillingto pay an agents commission.

Whatever the reason, you need to moderate your approach

as a buyer: it is easier to negotiate with a dispassionate

intermediary such as agent than with a seller who may be

emotionally involved in the sale. The seller may also have a

more inated view of the worth of the property, and may be

reluctant to budge on price.

There are no hard and fast rules here, except to use more

tact and to always explain your reasoning very clearly whennegotiating price.

You should also work closely with a lawyer to ensure that all

documentation is above board, and correct legal processes are

being followed. (In sales handled by an estate agent, the agent

will keep an eye on this on behalf of the seller.)


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What is settlement?

Moving

Steps to buying your chosen property

So youve found the one, and agreed on a price with the

seller. Nows when the real paper shufing begins. Well take

you through the process step by step.

Exchanging contracts

The rst important paper to be shufed is a contract for sale.

Neither you nor the seller is legally bound to go ahead with the

sale until a written contract is exchanged.

This contract usually details the:

Property address

Names of the parties (you and the seller)

Selling price

Terms and conditions

Special inclusions in the sale like a dishwasher or blinds

Date of settlement (the day you become the owner)

Exchanging contracts is pretty much what it sounds like

both you and the seller sign a copy of the document then swap

them. You also have to pay the deposit at this time.

Get legal representation

Its a good idea to get a legal rep to arrange the whole propertytransfer process. While this contract is usually prepared by the

sellers solicitor, your legal rep should check the details and

make sure zoning, heritage or title restrictions dont clash with

your intended use of the property.

Your legal rep should also:

Check that all property rates and taxes are paid up, and that

the seller is actually entitled to sell the property

Help you sort the property inspections that you should do

before you exchange contracts

The cooling off period

If you have bought through private treaty rather than at auction

you get acooling off periodafter the contract is exchanged.

During this period you can cancel the contract but there may

be a small penalty. The cooling off period varies from state to

state and WA doesnt have one at all.

Between exchange and settlementThe time between exchange and Settlement is usually six

weeks although this can change if both you and the seller

agree to extend or reduce it.

This is the time when you should:

Arrange the balance of the purchase pricethat is nalise

the nance and sign the mortgage documents.

Insure the property

At the same time, your lender will:

Probably arrange for a valuation of the property

Require you to take out building insurance effective from the

exchangeunless youre buying a strata property


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Knowing the cooling

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What is settlement?

Moving

Settlement

Settlementof the property is when the balance of the purchase

price is paid, and the keys and title deeds are handed over.

If you have a mortgage, your lender will receive the transferdocument and title deed.

Settlement of your loan usually coincides with settlement of

the propertyits when the lender transfers the money youve

borrowed as per your instructionsthis is usually to the seller.

You also need to paystamp duty at settlement


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Knowing the cooling

off period


What is settlement?

Moving

Know the cooling-o period

After youve signed the contract to purchase your property,

you may have several days leeway before you are locked into

the purchase. This is known as the cooling-off period. Thelaws vary according to state or territory, so you should seek a

solicitors advice.

Here are some key points to bear in mind:

Get legal advice as soon as you decide to cancel the

contract and before you notify the estate agent or seller.

Cooling-off periods are not applicable to properties sold at

auction, commercial properties or farms.

If you decide to rescind the contract, you must formally

notify the agent in writing, and within a set number of clear

business days after you (the buyer) have signed the contract.

For more information about cooling off periods and to

better understand your rights as a buyer visit your relevant

Government website.


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What is settlement?

Moving

Do you need insurance?

There are three main types of insurance youll come across

when buying your rst home. Here is a brief overview:

1. Lenders Mortgage Insurance

LMI is a type of insurance that most lenders require unless

you can put down a deposit of 20% or more. It varies

according to the size of the loan, and protects the lender

from home owners defaulting on their payments. It is

usually charged as a one off premium and calculated on a

sliding scale.

2. Mortgage Protection Insurance

MPI is a type of insurance you take out to cover your home

loan. Its not mandatory, but its a very good idea to have it.It takes care of some or all your mortgage payments if you

get injured, become too ill to work, or even die. Costs will

vary according to the extent of the cover you get.

3. Home and Contents Insurance

This insurance covers your new home and the belongings

you keep inside it. It covers your property from physical

damage, such as re or ood, or loss caused by burglary.

Lenders will require your property to be protected, because

they have a vested interest in it.


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What is settlement?

Moving

What is settlement

There are generally two types of settlement that happen with

most property purchases:

1. Settlement of the property is when the balance of the

purchase price is paid to the seller. The buyer receives the

keys and becomes the legal owner of the property.

2. Settlement of a loan coincides with settlement of the

property. Its when the lender transfers the borrowed funds

to the seller or the sellers mortgage holder.

The majority of people hire aconveyancerto handle the

transfer of the property. Once the settlement is complete, you

will need to transfer the name of the property from the vendor

to the yourself (the buyer). This is called the Registration of

Titles, and incurs a separate fee. Then the home is ofcially

yours.


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How to choose

a removalist

Moving checklist

Smart packing tips

Once youre in

your new home

Tips for moving with kids

MovingMoving can be an extremely stressful time and it is

important you take as much stress off yourself in

this time. There is where a removalist comes in handy,

choosing the right company can save you time,

energy and money.


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Moving

How to choose

a removalist

Moving checklist

Smart packing tips

Once youre in

your new home


How to choose a removalist

Moving can be an extremely stressful time and it is important

you take as much stress off yourself in this time. There is where

a removalist comes in handy, choosing the right company cansave you time, energy and money.

When choosing a company to help you with your move:

Get a number of quotes each company is different and may

offer a number of different services. Be sure youre getting

the right deal for you. Ask your friends or family for any

feedback on any companies they have had experience with.

You can obtain a list of qualied companies from the

Australian Furniture Removers Association

Make sure you trust and feel comfortable with your chosen

company as they will be in charge of all your valuables on

moving day.

Book well ahead to ensure your chosen company is available

on your moving day.

Before moving day, make sure you get a contract nalised

with your removalist. Ensure that the terms and conditions

of the contract are clear and all costs are included in the

agreed quote.

Under Australian law, removal companies do not have tocarry insurance and in most cases, because your goods

have not been packed by the removalist, they take no

responsibility for your contents in the event of damages.

Check if your current contents insurance covers moving,

otherwise you may need to look into transit insurance for all

your items to be covered for moving day. There are special

removalist companies who deal with valuable goods such as

antiques. If you have a lot of valuable items it might be bestto go with a company you know has experience handling

these types of items.

Some removalist companies include extras in their services.

If they dont include cleaning, you may need to organise

an additional cleaning service for your previous or new

residence after the move.
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Moving

How to choose

a removalist

Moving checklist

Smart packing tips

Once youre in

your new home


Moving checklist

Pre-book your removalist and get an ofcial quote

Check the weather in the lead up to moving day

Have a garage sale or organise a charity donation for all your

unwanted items

Remember to cancel your phone / internet and transfer to

the new location

If you have pets, plan what you will do with them on moving

day perhaps book them in for boarding on the day

Check your insurance on your items make sure theyre

covered while you are moving. You dont want to lose / break

something that is valuable and then not be covered

Remember to empty your fridge and drain your washing

machine for the move


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Moving

How to choose

a removalist

Moving checklist

Smart packing tips

Once youre in

your new home


Smart packing tips

Start packing about 6 weeks before you move so you dont

have to rush and end up forgetting things.

Write a list of items in each box so you can move andremember whats in each box.

Instead of buying boxes why not hire them. Boxes are

picked up for free after your move so you dont need to

worry about them.

Label boxes as fragile so the delicate items are treated

more carefully.

Count the number of boxes you have once everything is

packed to keep track of all your items.

Put all liquids in waterproof bags nothing worse than spiltliquid throughout your clean boxes.

If youre transferring cupboards with draws keep the

clothes in the draws so you dont need to pack and unpack

the items again.

If you have to take furniture apart to move it tape screws,

bolts and other loose items to the underside of furniture so

you dont lose any.


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Smart packing tips

Once youre in

your new home


Once your in your new home

Check which day your bins are collected in your new area.

Work out where your local services are located e.g. doctors,

plumber, electricians etc.

Redirect your mail and update your key contacts on your

new address. Australia Post can help with the re-direction

for a set period of time. This will help you remember which

companies to notify of your address change.

Get a realistic deadline to unpack in and dont move it.

Otherwise you could keep unpacking forever!


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Once youre in

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Tips for moving

with kids

Tips or moving with kids

Moving home is a huge stress on the entire family especially

if you have kids as part of the process. It can also be an

extremely stressful time for your kids. Here are some thingsto help you out when moving into your new home.

Plan your move

It is important to include the kids in the moving process. Let

them know when moving day is and what they should expect.

They are also moving out of their home, and it is important to

manage their feelings and fears for the move. If possible, take

them to the new house so they can see where they will be

living and get excited about the change.

Keep the idea of moving positive, talk about the positive

aspects of moving and try to exclude them from the stress of

it all. If they are moving into a new area, let them say goodbye

to their friends in the area so they have closure. This will also

decrease the amount of anxiety they feel about the change.

Moving day

If it is possible, organise for family or friends to look after your

kids on moving day. This will mean you have one less thing

to worry about on the day. When packing make sure you have

access to all the items your children will need e.g. nappies,medication, blankets, pyjamas etc. It is a good idea to pack an

overnight bag for each of the children so that they have all the

essentials handy.

Get older children involved in the process; this is a great way to

keep them feeling positive about the move and also for them to

give you a helping hand. Let them be in charge of packing their

items, so they can understand the process and learn from it.

Keep snacks and drinks handy so you dont need to worry

about nding food and drinks on the day for the kids.

The new house

As this is a new environment your kids may not know the

safe areas to play. Make sure you take them around the home

and outline the best places to play and also point out any

potential hazards.

To reduce the anxiety of the new home, set up a routine from

day one, show them around the new neighbourhood and talk to

them about the new house and the changes.

Date post:	08-Aug-2018
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Aussie First Home Buyers Guide

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