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Purchasing property is often the most significant purchase you will make. If you are purchasing property for the first time, this can be a very daunting experience. We have prepared the following tips to make moving into your dream home much easier.
1. Arrange for pre finance approval
Very few lenders will offer a mortgage if there is no property but most will provide you with pre finance approval to give you an indication of how much money you will be able to borrow, and how much interest will be payable. Pre finance approval does not mean that you will ultimately be granted finance approval for the property you intend to purchase, for this reason, insertion of a ‘subject to finance’ condition is important and should be discussed with your agent or solicitor prior to signing your offer to purchase.
2. Consider the true cost of buying
Purchasing property is not as simple as taking out a mortgage and picking up the keys. Before you commit, consider other costs including:
- Mortgage arrangement fees
- Valuation fees
- Legal fees
- Transfer duty (if you are purchasing a first home or principal place of residence, transfer concessions may apply)
- Removalists costs
- Repair work which may be required.
3. Get a Building Inspection
We advise that you get it checked by a professional to ensure that there are no nasty surprises which you were unable to identify when you inspected the property. A building inspection will examine every aspect of the property from the inside out and will identify things such as:
- Structural issues;
- Presence of mould and leaks;
- Whether the plumbing is running efficiently;
- Whether electrical systems are safe and in working order;
- Large tree roots which might compromise the dwelling.
You can make your contract subject to and conditional upon receiving a satisfactory building report. We recommend speaking to your agent or solicitor about this prior to signing your offer to purchase the property.
4. Get a Pest Inspection
A pest inspection will provide you with information in relation to past and present infestations of wood-destroying insects, such as borers or termites. Before hiring a pest inspector, do a little research to ensure that you are dealing with a qualified professional. Ask what their qualifications are and if they offer a guarantee on the inspection.
You can also make your contract subject to a satisfactory pest inspection. We recommend speaking to your agent or solicitor about this prior to signing your offer to purchase the property.
5. Check the terms of the contract are correct
Before signing your offer to purchase the property, check that all of the terms you have requested are included and review any special conditions inserted by the Seller. Pertinent items to look out for include:
- Conditions of sale (financing and building & pest inspection information)
- The purchase price and deposit amounts (ensure you note when payments are due)
- The settlement date
- Whether the property is subject to a tenant or that you will receive vacant possession at settlement
- Whether there are any included personal items or excluded fixtures.
6. Arrange conveyancing
Conveyancing is the legal process of transferring a property from one party to another. A conveyancer will conduct searches to ensure that there are no outstanding rates, undisclosed easements or other matters affecting the property so that these things can be resolved before settlement. Conveyancers handle all paperwork, local council searches and attend to settlement.
7. Keep your solicitor in the loop
During the purchase process, speak to your solicitor regularly. By keeping your solicitor updated during a property purchase, ensures the property will be transferred efficiently and all relevant paperwork will be in order.
8. Know when you can pull out
In Queensland, standard form contracts are used for the purchase of residential property. Under the standard form contract there is a right to cool off within 5 business days of receiving the contract. A seller may charge .25% of the purchase price as a penalty if a purchaser cools off. Provided building & pest and finance conditions have been inserted, you may also pull out of the contract if those conditions are not satisfied. In those circumstances, any deposit paid by you must be refunded in full.
If you have any questions in relation to the process of purchasing property in Queensland, please contact MCG Legal’s property team for more information.