Buying your first home is one of the most significant and largest purchases you will make in your lifetime. If you choose the right property, it will hold considerable value and significantly help you build wealth. If you also choose the right home loan or mortgage, you will be able to reduce your debt, or avoid paying a lot more than you would normally. It is no surprise then, that this is can be a stressful and confusing time.
Our job at Sydney Financial Advisers is to help simplify and clarify the entire mortgage process. We've outlined several considerations, as you start thinking about purchasing a property.
1. Pre-Approval
2. Deposits
3. First Home Owners Grant
4. Home Purchase and Home Loan Costs
(1) PRE-APPROVAL
The home purchasing process usually takes 6 weeks, from offer through to settlement. During this period, there are various deadlines that apply. Buying a home usually involved:
(a) Making an offer, including a deposit as a token of good faith. This amount is usually non-refundable, but gives you the purchaser a one week cooling off period. This amount differs by state, for example in NSW it is 0.25% of the purchase price, however in Tasmania there is no stipulated amount, and this can be negotiated with the vendor or their agent
(b) Cooling off period - this is usually one week long, and allows the purchaser to get final approval of their finances, it will involve various building and pest inspections, and the lender will usually organize a valuation to be conducted.
(c) Deposit - at the end of the cooling off period, the purchaser is required to pay a bank cheque or transfer a significant deposit to the purchaser. This amount is usually 10% minus the initial deposit outlaid at the offer stage. This amount is non-refundable, it is therefore essential that your lender has approved your loan before this point, so that you are certain you will be able to pay the loan.
(d) Weeks 2 to 5 usually involve your conveyancer finalizing government and statutory charges, and your bank drafting a loan contract with you
(e) Settlement date, usually week 6, will involve your conveyancer attending settlement on your behalf, the lender paying the remainder of the loan, and you signing the loan contract.
Based on the above, you can see that the first week of the process is very intense with several activities occurring simultaneously. This timeline should highlight the importance of pre-approval, and the significant amount of risk and pressure you can avoid by organizing this well in advance.
The pre-approval process allows you to find out more about home loans, identify how much money you can borrow, and how much money you can afford to comfortably repay, and to choose a lender. Getting pre-approval allows you to shop around with peace of mind. It should be noted that once you have a pre-approval, you are not under pressure to purchase immediately, usually pre-approvals are in place for 6 to 12 months, providing your financial circumstances have not significantly changed. Sydney Financial Advisers can help you select the most appropriate lender for your situation and show you the most effective ways to structure your loan.
Regardless of the product, we ensure that our services to you do not stop once the product is purchased.