Getting ready
First Steps
The first thing to do when thinking of buying a property is to make sure that you have the right help available.
Firstly, it is critical to have a lawyer or a conveyancer on board and ready to review the contract and negotiate its terms.
Secondly, you must ensure that you have the necessary borrowing capacity. Therefore, having a mortgage broker or a direct contact with your preferred bank necessary. Without knowing what is your borrowing capacity, you will not know what property you can buy.
Thirdly, you must get in contact with a pest and building inspector. A pest and building inspector will tell you what issues there are in a property.
Fourthly, receiving an advice from an accountant as to how to structure the purchase of a property is crucial. This should be done before a contract is signed.
Lastly, it is better to consult a property/investment strategist. Such professional can tell you when and where to buy.
Finding the right property
After you found a property
The next step would be to find the right property. It is a tedious process and will take a lot of your time. However, it is necessary.
When an offer is accepted by the seller, you will receive a draft copy of the contract.
You should provide your solicitor/conveyancer with that copy of the contract to review and negotiate its terms.
If you end up signing the contract, then you will need to take the next step.
Cool off period
After contract is signed
Most contracts have 5 business days cool off period from the date of signing the contract. This period can be negotiated and extended.
Sometimes, the seller requires you to waive this 5 business days cool off period.
During this 5 business, you should instruct your pest and building inspector to inspect the property and provide you with a report outlining the condition of the property with its defects.
You should also ensure that your mortgage broker/bank processes your loan application and provides you with an “Unconditional Loan Approval” for your required amount.
For any reason or no reason whatsoever, if you decide to walk away from the contract during this 5 business days period, you can do so. However, normally you will have to lose the holding deposit you paid with the agent.
If all things go according to plan, however, then you’ll need to consider the following steps.
Preparing for settlement
Normally, a contract specifies the completion/settlement date, which in NSW it is usually 42 days from the date of the contract.
Settlement/Completion date is the date where you have to pay the rest of the purchase price and you will be the legal owner of the property.
You should have your finance ready at this point.
You should also consider and put to the side money for your insurance. Most banks will not provide you with a bank loan without insurance.
Stamp duty
Most, if not all, property transactions attract stamp duty implications.
It is your solicitor/conveyancer’s job to process your stamp duty application. You should always account for the stamp duty amount when you consider your borrowing capacity.
If you are a first home purchaser, you may be entitled for stamp duty exemption or concession. This is a discussion you should have with your solicitor/conveyancer.
Post completion
After the transaction is completed, you will receive the keys from the agent.
Always ensure that you have the right insurance for your property.
Your accountant should advise you on how to claim depreciation of your property over time by claiming the wear and tear of your property. This is called a depreciation report and is prepared by a Quantity Surveyor.
Conclusion
While buying a property can seem to be a complication process, having the right professionals at your side will give you ease and peace of mind.
At Al Sarray Lawyers, we always aim to exceed our clients’ expectation by providing outstanding services.
For more information, please contact our Principal Solicitor Ahmad Al Sarray by visiting our website or clicking here.