Getting a home loan and buying a house is one of the most important decisions you will ever make.
It can be exciting and daunting at the same time. A Green Light Home Loans consultant can ensure you are armed with the all the information and knowledge you need to help you on your way to owning your home. A Green Light Home Loans broker will do the leg-work for you. We have access to hundreds of loans from a wide variety of lenders and will work with you to find the loan that suits your individual circumstances.
Step 1 – Work out how much you can afford - Do your sums
Even if you do not have enough money for a deposit, Green Light can still help you reach your goal. We have lenders on hand that can lend a large percentage of the value of the intended purchase property.
Apart from the purchase price, additional costs that you may have to account for include:
- Stamp duty
- Legal fees
- Mortgage insurance
If you qualify for any grants, you could use these to help cover the associated purchasing costs or to increase your deposit. Green light will be able to help you identify whether or not you qualify for any of these.
Stamp duty costs vary from state to state. Next to your mortgage, it is one of the biggest expenses that you will incur during the home buying process. If you are a first home buyer you may be entitled to concessions on the stamp duties payable. Our job is to identify these concessions and ensure you receive what you are entitled to.
Use our stamp duty calculator to calculate how much you will need to pay.
Step 2 – Obtain pre-approval finance
A Green Light consultant can organise a pre-approval for you before you start shopping for your dream house.
Often referred to as an ‘Approval In Principle’, a pre-approval means that you have satisfied the relevant lending criteria and therefore qualify for a Home Loan subject to suitable security property.
The advantages of a pre-approval are:
- A Green Light consultant can help you select the right lender
- It provides you with an indication on how much you can borrow, allowing you to budget.
- You have a net budget when you shop for a property. This reduces the time house hunting by narrowing property searches to those that you know you can afford.
- Gives you a competitive advantage over other home buyers. You are treated as a serious buyer by agents by having a ‘pre-approval’.
- You will not encounter delays caused by unforeseen issues once you find a suitable property to purchase and have signed a contract. This alone will help alleviate much of the stress you may experience if there are problems with your loan application.
- Getting pre-approval can also give you significant negotiating power. If you indicate to a real estate agent that you already have the money waiting and all you need is a bill of sale, the thought of them selling a house quickly and securely will give you a little more leverage.
Obtaining pre-approval is the best way to go as it provides you with comfort knowing you can get a loan and usually costs nothing to obtain. They are normally valid for a few months depending on the lender.
CAUTION: Not all lenders provide a full pre-approval where all the checks based on information provided are completed and verified. They simply do an ‘indicative’ result. In these cases problems can still be encountered. However, at Green Light we make sure all checks and verifications are done. This gives you peace of mind.
Step 3 – Do your research
Once you have decided to buy a home and have seen a Green Light Home Loans Consultant for loan pre-approval, it is worthwhile doing some homework to ensure the new home meets your needs.
Things you should consider are:
- The neighbourhood – It is important to research the perspective suburb(s) to see if you would enjoy living there. Even if you can buy a bigger home for your money in an area that’s not appealing, it is important to remember you can always make changes to the house, not the neighbourhood.
- Obtain a property report – As a service to its customers Green Light can provide you with a report on the property you are looking at purchasing. This is free and it will give details of other properties that have sold or are on sale in the area. Request a report from our home page if you have a specific property in mind.
- Location to Amenities – How far away are the shops, schools, public transport, and activities for the children and so on.
- Level of Crime – Certain areas have higher level of crime than others. You can check with the local police station for crime rates in particular areas or subscribe to receive police updates via e-mail.
- Condition of the other houses in the area – How well presented are the other houses in the area? Do they look run down? Are the lawns overgrown? Could they bring down the value of your home?
- Features of the house – What features are most important? Number of bedrooms and bathrooms? Does it have a lock-up garage?
Call or e-mail Green Light Home Loans for a free check-sheet to help you choose and compare properties you are interested in.
Step 4 – Talk to A Legal Representative
We recommend that you work with a solicitor or conveyancer right from the beginning of the house hunting process. In fact, once you have a loan pre-approval you should talk to a solicitor before you go house hunting, just so you know what to expect. This provides you with the opportunity to obtain quotes on approximate costs and to establish a professional working relationship so that legal representation is available quickly once you find a home or if you encounter any unexpected problems.
It is important to see your solicitor before signing any legal documents, in particular the contract of sale. This is to ensure that your best interests are protected. The real estate agent is a professional negotiator that represents the vendor. Although they may come across as being friendly and trustworthy, their vested interest is in achieving the sale of the property quickly and at highest possible price.
As a simple rule – Do not sign anything to do with buying your home without first getting your solicitor to check it. Many solicitors prefer you to do this as it can prevent problems and normally do not charge you extra for this service. Remember, your solicitor is working for you and is being paid by you to have him look after you. They have your best interest at heart.
Not sure which solicitor to use? Call us Green Light Home Loans and we can refer you to well-known solicitors who are specialist in thier field. Like anything some solicitors may be cheaper than others but may not be as good as others who cost a little more.
Green Light Home Loans and our staff do not receive commission for referring you to outside agencies such as solicitors. So you know that if we recommend someone to you, they truly are the best at what they do.
What is Conveyancing?
The term ‘Conveyancing’ refers to all the legal and administrative work associated with transferring the ownership of property from one owner (seller or vendor,) to another (the buyer). The conveyancing process starts after an offer has been made and accepted for a property, and solicitors’ details have been exchanged by the two parties.
It is possible to complete the conveyancing yourself. However, due to time constraints, the sheer amount of paperwork and most importantly the legal consequences involved, we strongly suggest you employ a professional to undertake this for you.
If you make a mistake by doing it yourself you will have no right to demand compensation. However if a solicitor makes a mistake, which he shouldn’t, you will. For the relatively small amount you will save doing things yourself we advise that it really is not worth therisk.
Caution – Real property purchase and conveyancing laws differ substantially across various States and Territories of Australia. A further reason to consult a solicitor before shopping for a home.
Step 5 – Go Shopping
It is now time to start house hunting for your dream home.
There are various resources you can use to pre-qualify potential homes to ensure that they meet your basic requirements of price, location and characteristic.
- The Internet – Visit real estate websites, such as www.myhomeonline.com.au or www.realestate.com.au to gain descriptions and pictures of a wide range of properties. This site allows you to narrow your search by location, price, the number of bedrooms and other desired features you need and it helps you get a ‘feel’ for the market and the areas you wish to buy in.
- Newspapers and real estate magazines – Check the property section in the weekend newspaper or look for real estate magazines available at newsagents, convenience stores and other outlets. These free publications feature pictures and brief descriptions of listed properties in any given area with details of “open house” times for when you can inspect the property.
- Keep an eye out – Drive around locations that interests you and look for “For Sale” signs. This is a good way to find homes that are sold privately without the use of an agent.
- Visit Display Villages – If you are looking for a newly built home, this will allow you to see a number of different houses completed by various builders. It also gives you an opportunity to gain information from builders. Take careful note of work quality and standard.
- Work with a real estate agent – Some buyers find it beneficial to seek a real estate agent to assist in the purchase. They are trained professionals and will know what is available in the market.
- If building, check with the Building Services Authority at www.bsa.qld.gov.au to ensure the builder is licensed and to learn your rights and responsibilities.
- At Green Light Home Loans we have access to RP Data reports and can provide this to you free of charge. This will give you some history on the property you are considering purchasing and information on sales activity in the area. If you would like a report you can obtain one from our home page.
Useful House Hunting Tips
- Keep records – It’s a good idea to visit lots of different homes before choosing one. When going for property inspection it is important to take notes. To make sure you have all the information you need to compare homes, prepare a check-list. Don’t forget to account for property rates, major repairs and other matters that will affect your monthly housing expenses (eg. pool maintenance). You should also be ready to compromise. Chances are you won’t find a home that has everything you want. Call Green Light Home Loans for a check list to help you compare.
- Think twice – Even if a home seems perfect, go back and take a second, more critical look at it. Visit on different days and times, chat with prospective neighbours and look beyond cosmetics and consider the potential for the home.
Take your time – It is very important not to be in a hurry. Being in a hurry could result in many mistakes such as being pressured into signing contracts without thinking things through or legal advice.
Step 6.1 – The Offer
Once you have found the home you would like to purchase, you will need to present the seller with an “offer”.
It is important to consider at this point that properties do not have a fixed price. Therefore savings can be made by negotiating with the seller or their agent over price. A typical opening offer is about 5-10% lower than the asking price, and the two parties take this as a starting point for further offers and reductions in asking price until an agreement is reached. Be aware that the asking price is often set high in order to encourage a higher opening offer than would be given with a lower asking price. In most cases it is anticipated that you will negotiate.
Some factors that you need to consider before you make the opening offer are:
- The number of people interested in the property. If you are the only buyer, you are in a strong negotiating position and the seller is likely to accept a lower price. If there are two or more parties making offers, the seller and their agent will be far tougher during negotiations and you may be sensible to offer a more realistic price. Remember many agents may tell you that there are other people interested in the property to try and encourage you to make a higher bid or to act quickly. Try not to be pressured and talk to your solicitor first.
- How quickly the seller needs to sell. If they need to sell quickly, they will be more likely to accept a lower offer.
- How long the house has been on the market. If the seller is having difficulty selling the house, they are more likely to accept a lower price. Check whether the asking price has dropped since it went on the market. Try and establish why it is taking so long to sell – Is there a hidden problem? Our reports will help you with this.
- Have you got pre-approval? This gives you a position as a serious buyer. Do not tell them how much your pre-approval was for, simply state that you have it. Knowing that the sale of a house will be 100% secure is another positive selling point.
Remember: When buying property it is always “Buyer Beware”.
The process of making an offer, receiving a counter offer and then revising it again is common. The whole process can seem like a roller coaster ride — exciting, but stressful. It’s all part of making the deal work best for you and the seller.
The diagram on the next step outlines the entire process for you in detail
Step 6.2 - The Offer Continued
Questions for the Offer to Purchase
|The real estate agent prepares a Contract of Sale for the Purchase. This contract should include all the details of the sale.||You should have your legal representative look at the contract BEFORE it is signed and shown to the vendor. It is a legally binding document.||The real estate agent will present the offer to the vendor, who will
(1) Accept the offer
(2) Make a counter offer(3) Reject the offer
The seller accepts your offer. The deal is concluded.
The vendor may make a counteroffer, asking for a higher price or different terms. You sign the offer back to the vendor with a higher price than your original offer, but lower than the vendor’s counteroffer. The vendor accepts this counteroffer. The deal is concluded.
|You sign the offer back to the vendor with a higher price than your original offer, but lower than the vendor’s counter offer.||The vendor accepts this counter offer. The deal is concluded.|
The vendor may make a counter offer, asking for a higher price or different terms. If a counter offer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment with costs you can’t afford.
|You reject the counter offer and decide not to make a subsequent counter offer.||The sale doesn’t go through and your deposit is returned|
If you reject the counteroffer and decide not to make a subsequent counteroffer, the sale doesn’t go through and your deposit is returned. When you make an Offer to Purchase, the real estate agent or your legal representative will most likely add certain conditions to it, making it a conditional offer. This means that the contract will only become final when the conditions are met.
The following two conditions are generally standard in the Contract of Sale, especially for first-time buyers:
- A satisfactory Building and Pest Inspection
- Subject to Finance
Caution – The above is typical of a Queensland property purchase and will differ slightly in other states. We recommend that you check with your solicitor first.
Step 7 – Life Insurance/Loan Protection
The mortgage or home loan is the biggest financial commitment that you and your family will have. If the unimaginable were to happen, how would your partner cope with sizeable monthly repayments and reduced income? Not a pleasant thought, is it?
Green Light Home Loans stresses the vital importance of having adequate life insurance or ‘loan protection’. For a relatively small premium you can have peace of mind that in an event of a ‘worst case scenario’, your dependents will not have to worry about home loan repayments or losing the family home all together.
Talk to your Green Light Home Loans Consultant about loan protection, alternatively, if it is life insurance you require, we can organise a convenient time to see a Financial Planner specialising in life and risk insurance who can advise you on your insurance needs.
It is important to note that you insure your house and motor vehicles as they are a substantial asset. Why not insure your largest and most valuable asset; which is your ability to earn an income and provide for your family.
Step 8 – Finalise Your Loan
It is now time to get the home loan formally approved.
In step 2 of this guide, your consultant may have organised pre-approval to determine maximum borrowing capacity. Generally the only condition that needs to be satisfied is the location of a suitable security property. From a lenders perspective, a suitable security property will be determined via a property valuation.
Before going to the lender whom pre-approved your loan, your consultant will do a check to make sure it is still the most suited for you. If something better is available your loan can be changed to another lender knowing that you still have a fall back to the original lender, if needed.
When you take the purchase contract to your Green Light Home Loans consultant they will then organise a valuation of the home you want to buy through the chosen lender after checking that the loan is still suitable for your needs.
Once the valuation is completed and everything is in order the lender will issue a formal / unconditional approval and will then issue the lending agreement and mortgage documents.
During the period it takes to finalise the home loan it is important to organise a building and pest inspection to guard against unexpected surprises once you move in.
Important Hint: If you are in Queensland, once the contract is completed and signed it is important to organise building insurance on the property you are buying to protect your interests even before finance is approved. In Queensland ‘risk’ passes when a contract is signed which means if something happens to the property while it is under contract it is your (the buyers) responsibility. Not sure how to go about getting a cover note – talk to us at Green Light or your consultant. We will point you in the right direction.
Step 9 – Settlement
Settlement day is the day when you finally achieve your goal — you take legal possession and finally get to call your new house your own. You are sure to feel great relief and satisfaction but remember that the home buying process isn’t over just yet. There are quite a few things that need to be done on settlement:
- Organise where you will collect the keys from before settlement day to avoid confusion. Whether it is from the real estate agent or from your legal representative.
- You must provide the balance of the purchase price to your legal representative along with the other statutory costs. Your solicitor or legal representative should be able to provide you these figures the day before settlement.
- Your legal representative will liaise between the lender and the seller’s legal representative to organise settlement times and venues.
- Your legal representative will affect settlement and register the home in your name, and provide you with the keys to your new home if this has be organised beforehand. It is normally not a requirement for you to attend settlement
Congratulations!! – You can move in! Buying a home is often likened to organising wedding – it is full of stress and uncertain ground. We suggest that you follow the steps we recorded above and let the professionals, such as your solicitor and Green Light Home Loans Consultants, guide you. This way buying your home should be an exciting and enjoyable event.