Purchasing property can be an exciting and rewarding experience, but it’s important to avoid some of the common pitfalls that could cost you time and money. From not getting pre-approval to not using solicitors or conveyancers to review contracts, there are several key steps you should take in order to protect yourself from making costly errors during this process. By understanding these issues ahead of time, you can rest assured that your purchasing experience will go as smoothly as possible.
This guide will provide detailed information on each of these areas so that you can feel confident when making this major decision.
1. The Importance of Getting Pre-Approval
The importance of getting pre-approval before buying a property cannot be understated. Pre-approvals are the first step to a property purchase, and it is essential for any potential buyer to know what they can reasonably afford before beginning their search. It involves obtaining a loan from lenders through a bank or mortgage broker by submitting your financial information.
If you want to buy property, getting finance approval is important because it allows you to search for properties within your budget range, have a rough idea of monthly repayments, offers potential sellers more security in knowing that you are financially able actually to purchase their home, and helps speed up the purchasing process so you don’t miss out on purchasing your dream home due to delays in obtaining finance.
Prior to becoming a home buyer, getting pre-approved will also help you understand what type of loan best suits your needs as different types of loans may have different benefits or drawbacks depending on individual circumstances. Knowing which type of lending institution is most suitable also plays an important role when it comes to financing a property purchase.
Before applying for home loan pre-approval, it is important to research various lenders and compare interest rates, fees, conditions and repayment periods associated with each lender’s products. This will help narrow down the field of potential lenders and make selecting the most appropriate loan easier. It is also important to evaluate your financial health thoroughly to know how much you can realistically borrow without overextending yourself financially, which is something mortgage brokers can also help with!
2. Why It’s Essential to Have a Building and Pest Inspection
During the home buying process, having both building and pest inspections done by professional inspectors is essential as they provide buyers with invaluable insight into any problems in the building structure or surrounding environment that may affect its future value or safety. Property inspections involve having a qualified professional check for all the common issues such as mould, structural, plumbing and electrical issues, leakages, pest problems and much more! If you don’t pay attention to this first it could cost you a fortune to repair later.
Identifying any underlying structural issues early on helps ensure buyers do not incur large costs after settlement whilst also avoiding potentially unsafe living conditions caused by pests such as termites or rot damage due to poor ventilation or inadequate drainage systems around the house structure itself. This is especially important for an older property.
A building inspection will check for signs of external damage, including cracks in walls or foundations which could lead to further structural difficulties over time if left unchecked, while a pest inspection looks out for evidence such as woodworm infestation, fungal growth (which often occurs in humid climates) or even vermin like rats which may have taken up residence within cavities within walls/ceilings/floors etc., all of which could be extremely detrimental both financially and health wise if left unattended for too long! Additionally, having both these reports completed prior to purchasing ensures buyers have peace of mind when making (probably) one the largest investments in their life – giving them full confidence in knowing exactly what they’re buying into!
3. Understanding the Additional Costs Associated With Buying a House
Understanding the additional costs associated with the purchase of a property is essential in order to avoid any unexpected surprises or budgeting issues down the line. Aside from the cost of purchasing the property itself, numerous additional purchasing and legal fees must be considered when calculating your total purchasing budget.
These can include stamp duty, valuation fees, conveyancing fees, lender mortgage insurance, pest and building inspections, moving costs and even lenders’ mortgage insurance. Understanding each of these costs upfront helps buyers set realistic expectations for their overall purchasing budget rather than being caught off guard by expensive hidden costs (some say to keep about 5-7% of the purchase price aside for these costs).
It’s also important to consider ongoing costs such as home insurance and council rates for the property you intend to purchase. These will vary depending on which state/territory you’re buying in so it’s important to do some research prior to making an offer on a property. Other potential ongoing expenses may include water usage and utility bills, strata body corporate levies (if buying an apartment or townhouse), and maintenance such as repairs or renovations that may be necessary over time – all of which should be factored into your long-term purchasing strategy.
Finally, it’s always sensible to create a contingency fund for your new property in case of unforeseen circumstances – this will help provide financial security should anything go wrong during the purchase process or after settlement has occurred. By considering all of these factors ahead of time, buyers can rest assured they have done everything possible to protect themselves from making costly errors during this process!
4. Why You Need to Get a Solicitor or Conveyancer to Review Your Contract
It is absolutely essential to have a solicitor or conveyancer review your contract carefully, as they are experienced in such matters and can identify any potential risks that may arise from the purchase. They will be able to advise on how best to protect yourself legally and ensure that all relevant clauses are included in the contract, which are in line with Australian consumer law.
Having a qualified professional review your contract of sale will help you understand what implications the terms of the contract may have for you. For example, if there is an unexpected increase in the cost of purchasing the property due to some unforeseen circumstances, having a solicitor or conveyancer review your agreement gives you peace of mind knowing that you will be covered from any additional costs arising from such circumstances, especially when you’re paying the full purchase price.
In addition, solicitors and conveyancers can also look at the language used in contracts to ensure that it is clear and unambiguous. They can also identify clauses that may impose unwanted restrictions or liabilities that could be avoided or negotiated around, check whether required documents have been provided, whether there are any compliance issues, anticipate possible pitfalls, provide advice about non-refundable deposits, ensure there is a cooling off period etc., all of which helps buyers protect themselves when during the buying process.
Ultimately, getting a solicitor or conveyancer to review your legal documents prior to purchasing ensures buyers make informed decisions regarding one of their most significant life investments – giving them confidence throughout this potentially confusing process! Not to mention, they can talk to real estate agents for you!
5. Doing Research Into the Local Area Before Making an Offer on a Home
When buying your home, it is essential to research the local area before making an offer so that you know:
- What other properties are selling for (so you’re not overpaying on a purchase price);
- What the neighbourhood is like (crime rates & safety);
- If it’s close to nearby amenities such as parks, schools, shops etc.;
- What the public transport options and commute times are like;
- If any potential future developments in the area may affect your home’s value;
- If any zoning laws will affect what you intend to do with the land (e.g., building an extension);
- What the water supply and sewerage connections are like etc.
All in all, at Pinpoint Finance, we recommend creating a checklist of your non-essentials (e.g. close to work, close to kids’ school) so that you know exactly what you’re looking for when purchasing your home and exactly what you don’t want in your new area.
Purchasing property is no small feat and can be quite intimidating for those who are unfamiliar with the process. However, by following this essential guide, you’ll have all of the information needed to make an informed decision that best fits your lifestyle needs and avoids costly mistakes.
So, what have we learnt?
It’s important to get pre-approval from your lender before signing any contracts; use solicitors or conveyancers when reviewing documents; research the local area thoroughly; have a building and pest inspection done; factor in additional costs such as stamp duty, legal fees, insurance etc.; and create a contingency fund so you know you’re covered if anything unexpected arises during settlement. By taking note of these five key steps we’ve outlined here today, you’ll have greater confidence in making informed decisions during this process so that you can feel content with this huge investment. Good luck with purchasing your new home!
If you’d like the assistance of a mortgage broker to help you understand the buying process and what it’s like to get into the property market, reach out today! We can help you with property valuation, home loans, figuring out your mortgage repayments, potential buying costs in this housing market, and so much more!
