Becoming a homeowner is one of the biggest decisions of your life, with endless factors to consider before making a commitment. Whether you are looking to buy for the first time or seeking a larger home, make sure you exercise due diligence to research and understand the home buying process.
This process includes everything from the pre-approval step to moving into your new home. This is not something you have to navigate alone though! Before you seek the best conveyancer in Melbourne or elsewhere in Australia, make sure, you know the following steps so you can be an informed buyer.
Step One: Are You Ready?
Before diving into this commitment headfirst, you have to decide if you are ready. If you have any doubts or unquenchable wanderlust, you might not be ready for this commitment. You also have to conduct an in-depth assessment of your financial status. This includes job security, family size, and your credit file.
Your financial status will be a major factor in determining how much a lender will be willing to loan you. An honest conversation with an accountant will help you evaluate your budget and finances that will help inform your property and home search.
Secure a copy of your credit file and clear away debts as much as possible. If you have multiple outstanding credit cards balances or loans, focus on minimizing those first. Reducing your credit card balance will help secure a larger loan amount.
Deciding to become a homeowner means you really know what you want for the future. If you assess yourself critically and honestly, you will be able to answer this question.
Step Two: Realty Reality
Working with a conveyancer, financial advisor, or lender will help you understand the full picture when it comes to buying a home. Here are some of the costs you can expect from home buying:
- Deposit: This is typically 10-20% and is a deposit needed to secure a home loan.
- Stamp Duty: This amount will depend on the state you reside in and will be applied to the property purchase value.
- Conveyancing and Legal Fees: This amount will depend on the legal work needed for conveyancing but ranges from $1000 - $3000.
- Insurance and Finance Cost: This will vary based on how much you are borrowing but you do have to take out insurance to protect the lender if you fail to repay the loan. There are also fees for applications, valuations, and settlements.
- Pest and Building Inspections: Every home must be inspected – after all, you would not want to invest in a structurally unsound or pest-ridden property.
After all of these costs are factored in, be sure to add the mortgage repayments, moving costs, home insurance, utilities, council rates, and any emergency repairs needed.
Step Three: Right Rate
If you have a deposit ready to go, awesome! You will need to shop around for the best mortgage and interest rate financing options. When exploring, be sure to understand all agreement terms and ask about:
- Loan term (normally 25-30 years)
- Interest rate (fixed or variable?)
- Ability to redraw funds
- How often is interest recalculated?
- Can you make additional payments?
Step Four: Pre-Approval
This conditional approval gives you an idea of what your price range will be when you search for a home. Banks and lenders will give you pre-approval to a certain amount based on savings, credit report, income, and investments.
Step Five: Choices, Choices
Once you know how much you can spend, it is time to go shopping! Work with a great conveyancer to find something that meets all of your needs. Having a list of non-negotiables will be great to narrow down the options. Examples include:
- Access to services, shops, and transport
- Pending infrastructure plans for the area
- Community vibe
- Property type (house, studio, townhouse, unit)
- Architecture style (modern, art deco, renovation)
- Practical elements (bedrooms, bathrooms, and parking)
Step Six: Commit and Get Started on the Next Phase
After you find the right property, you will be ready for the next phase. This phase includes property inspections, offer price, and eventually, moving in. A conveyancer can help schedule inspections and negotiate the offer and contract terms on your behalf. There are some windows in this period to cancel and back out, but do that with extreme caution. It should take about six week to navigate this final phase.
Step Seven: Move In!
Finally, you can pack up and relocate to your new home!
Published by Zoe Sewell