FAQ’s for Buying
Below is a list of commonly asked questions we get from buyers when purchasing a property.
What are the extra costs involved in buying a home that I should consider?
Not all of the following costs apply to all situations—so think about which ones might to apply to you.
There are two types of stamp duty you need to be aware of: Duty for the property transfer & Duty for the registration of your mortgage. Stamp duty is charged by state and territory governments so the amount you will pay depends on where your chosen property is located. It will also vary according to the purchase price of the property. In some states/territories, stamp duty concessions may be available to certain purchasers, for example, if you are building a new home. Even with concessions in place, stamp duty can significantly add to the cost of a property so be sure to factor it into your budget. You can calculate how much duty you may need to pay by using an online Stamp Duty Calculator. For more information take a look at the website of the revenue office in your state or territory.
Buying a home is a legal process; this means that after signing and exchanging contracts you’re legally bound to buy the property. It is vital that buyers speak to their conveyancer or solicitor about the conveyancing process before exchanging contracts to avoid the common pitfalls, such as forfeiting the deposit if you don’t commit to the sale. Conveyancers/Solicitors will usually charge a single fee, but may not include any necessary searches in the price, so be sure to ask about any extra costs.
The contract doesn’t cover the quality of the buildings on the property – what you see is what you get. This is otherwise known as ‘caveat emptor’ or ‘buyer beware’. The buyer should organise both a Pest Inspection – which advises of any pest activity affecting the property – and a Building Report – which advises of any structural problems.
Note: You may also want to consider having the electrical wiring and plumbing examined, as this isn’t covered in a building inspection.
If you’re buying a unit, townhouse or villa, you require a strata report. This summarises an inspection of the strata records of the owner’s corporation, identifying which insurances are in place, quarterly levies, any special levies, the financial position of the scheme, any ongoing maintenance problems and any issues noted in minutes of owner’s corporation meetings. Any major issues highlighted in any of the reports may be used as a negotiating tool to reduce the purchase price.
Can I make an offer on a property if I don't have finance pre-approval?
Although there is nothing stopping you from making an offer, it is always safer to have your finances, or a conditional approval in place. This can save any disappointment in the long run.
We suggest the first stage of the home buying process is to check if your lender will approve your loan before you make an offer. You’ll have heard different terms used to describe this process; pre-approval, approval-in-principle and conditional approval are the most common. Something you should be aware of is that these terms are used by different lenders to explain different types of assessments of your financial position before they give you a loan. For some, they use it as an affordability enquiry; for others, as conditional approval, but with many more checks to be done. Confusing right? You should always check with a lender what their approval process involves – and exactly what it covers – before you make an offer on a home.
What is a cooling off period?
When buying a property, there’s a very critical stage that happens after you sign the contract called the ‘cooling off period’. This stage starts on the very same day you receive a fully signed copy of the contract. This cooling off period is usually five business days long – weekends and public holidays not included. If you change your mind about buying a property during this time, you can cancel the sale.
Once I put in an offer on a property, when is the deposit due?
A buyer will be encouraged to pay a deposit when signing the offer. Deposits can be paid by way of cheque or electronic transfer of funds. They can also be paid using deposit bonds or bank guarantees. Buyers should seek advice from their financier as to any associated costs with deposit bonds or bank guarantees before paying a deposit in this form.
Do I get my deposit back if I don't obtain finance or the building & pest inspection is unsatisfactory?
If you need to obtain a loan to buy the house then you must place a finance clause on the contract. REIQ and ADL contracts both have special areas to write in a finance clause and each have similar requirements to ensure the contract becomes “subject to finance”. Make sure you discuss with your bank how long it will take for them to give you a letter of unconditional approval as you will need to keep that in mind when writing it into the contract.
For example, if the bank needs 14 days to process your application for finance, then make sure that that is the timeframe in place on the contract. If you sign a contract without a finance clause, and you need to obtain finance but your application is unsuccessful, the seller can terminate the contract, keep your deposit and sue you for costs and losses if they resell it to another buyer at a lower price. Therefore, it is essential to include a finance clause to ensure you are protected.
Like the finance clause, you will need to ensure the contract has a condition that allows you to terminate should the building & pest inspection report be unsatisfactory. If the report finds structural defects, active termites or extensive termite damage, or if there are numerous issues which, when combined, add to a significant amount of work and costs borne by the buyer after settlement, then you may be able to elect to terminate the contract and get your deposit back. This is depending on the issues that arise, as the contract states that you must be reasonable. In this case, it’s better to call us and discuss a negotiation of price after a quote for the work has been completed. While the seller is not obliged to negotiate, they may decide to offer you a reduction. If the seller does not agree to negotiate then you may be forced to accept minor issues.