Aussie First Home Buyers Guide

put yourself in a better place
first home buyers guide

planning on purchasing your first home?
Where do you start? Let Aussie help you take the first steps to becoming a home owner for the first time by reading our first home buyers guide.
www.aussie.com.au/home-loan/first-home-buyer-guide
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contents
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1 - 11 12 - 18 19 - 28 29 - 34 Thinking Looking Finding Moving
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Thinking Moving from renting to owing Saving and your deposit Choosing the right loan and considering the costs Understanding Mortgage Broking Looking Finding Moving
Thinking
There are advantages and disadvantages to both owning and renting. But ultimately, the decision will come down to your individual circumstances.
pg. 1
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Moving from renting to owning

Your monthly rent payment may be less than mortgage repayments, especially if youre sharing You dont have any control beyond the term of your rental agreement Youre limited in the changes you can make to the property
Rent Generally youre not locked into a long-term commitment, and can move out at short notice Someone else owns the property
Own It takes longer to sell a property, so you have less freedom to move Its a place of your own
Which is better: owning vs renting There are advantages and disadvantages to both owning and renting. But ultimately, the decision will come down to your individual circumstances. Here are some things to consider:
Rent If the value of the property rises, you may have to pay more in rent Building maintenance is your landlords responsibility Your rent is fixed for a relatively long period of time Youre paying off someone elses mortgage Own If the value of the property rises, youre likely to make a profit if you sell it You need to budget for building maintenance Your repayments may fluctuate with interest rate changes Your property is likely to be an appreciating assetand could become an investment property in the future Your mortgage repayments may be more than your rentbut you can also view this as a form of saving The property is yours to live in as long as you want to Generally you can do anything you like with the dcor and outdoor areas
Purchasing your first home is one of the most exciting things most people do. Its also a complex process, especially for first-timers. But the result is invariably worth it, and if the value of your property rises, youll have a valuable appreciating asset on your hands. Should you buy with someone else? If you cant afford to buy your own home, you might be thinking about buying a house or apartment with a friend or relative. Its known as co-borrowing and its a small but growing trend. Things to consider in relation to co-borrowing: Your buying power may be higher with more than one person involved and may give you access to a greater range of properties. It can be quicker to raise a deposit, and you may be able to put down a larger deposit. It may be easier to meet the repayments with two salaries, which gives you both a bit more flexibility. Important to note that even if both parties are eligible for the First Home Owners Grant, only one can be used.
pg. 2
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The key to success is having a strong relationship with the other person, an equal 50/50 share in the property, and a legally-binding contracteven if you are going in with a family member. This contract needs to cover things like: Maintenance Payment for damage Capital gains liability A contract is also essential because if one person defaults on a loan payment, the other person is often liable. And the default can be innocuous: it could come from someone losing a job or their income from investments, or becoming too ill to work. A contract also becomes critical if there is a breakdown in the partnership and one of the parties decides to opt out. So seek legal advice and make sure youve got all the key elements covered if youre thinking of co-borrowing.
pg. 3
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Saving and your deposit

Your credit record is more important than you think If youre planning to buy a house, its a good idea to check your credit file. Because when you apply for a home loan, lenders will be casting their eyes over it too. Theyll be looking up: Obvious personal details such as your name and current address, your employment details, and directorships. Credit applications youve made in the pastsuch as for credit or store cardsand to see if youve defaulted on payments, or have an infringement to your name. Over time, your credit records are updated and deleted. Applications and defaults disappear after five years, and serious infringements and bankruptcies go after seven years. You can find out more information on how to check your credit report on the Australian Securities and Investments Commission website. If you live in Tasmania you should also contact the Tasmanian Collection Service. Why you need a deposit When youre looking for your first home, you need to know how much you can afford to pay off each month on your home loan. That will help determine the size of the loan you can get, and therefore what property you can buy.
The deposit that you can put down is just as important. Heres why: 100% loans typically no longer exist Generally its no longer possible to get a loan for the whole of the purchase price. Most lenders will want you to put down at least 5% of the purchase price of the property. The rest generally up to 95%can be financed using a home loan. You get access to lower interest rates If you can put down a deposit of 10%, this will often get you a lower interest rate on your loan, because there is less risk involved for the lender. Avoid paying Lenders Mortgage Insurance If you can put down a deposit of 20%, you might be able to avoid paying whats known as Lenders Mortgage Insurance (LMI). Pay less in the long run The more you can put down as a deposit, the less youll have to borrow. That means youll pay less in interest over the lifetime of the loan, and your repayments will be lower over a set term. Use this Loan Repayment Calculator to see the kind of difference it makes. More loans to choose from A bigger deposit also means youll get more loans to choose from. Which makes it easier to get a good deal on the right loan, and save even more in the longer term.
pg. 4
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Something for nothing: the First Home Owner Grant & Boost The First Home Owners Grant (FHOG) is great news for first home buyers. Its a one-off, tax-free $7,000 payment to people buying a first home in Australia. Heres the small print: You must be an Australian citizen or permanent resident buying or building your first home in Australia. The property you buy must be a recognised house, unit or flat specifically designed for people to live in. You or your partner must not have purchased in Australia before. You must occupy the home within 12 months of settlementor within 12 months of building completion if its a newly built home. You must apply for the grant within 12 months of settlement or building completion. Contracts must be exchanged between the buyer and seller before the cut-off dates, and the money is paid at the time of settlement. The FHOG is a good chunk of money, and lenders will consider it as part of your savings and deposit.
How to get the FHOG The state and territory governments hand out the grants on behalf of the Federal Government. Some also offer additional bonuses for first home-buyers, like stamp duty concessions and extra money. Ask your broker or lender about the perks and lurks that you should know about, or take a look at the website of the revenue office in your state or territory: ACT | NSW | NT | QLD | SA | TAS | VIC | WA More good news: First Home Saver Account If youre a first home buyer, the First Home Owners Grant isnt the only financial bonus you can get. The Federal Government will also add extra dollars to your savings when you set up a first home savers account. Every year, it will contribute 17% of whatever you put in up to $850and give you a tax break on the interest. Weve created a calculator to show how you can build a healthy deposit using one of these accounts. The flip side of this is that you cannot withdraw the money for any purpose except to buy your first home. If your circumstances change and you decide not to purchase a property, youll need to transfer the balance into superannuation and close the account.
pg. 5
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Choosing the right loan and considering the costs

What is pre-approval and why do you need it? You dont need to find your new home before you can apply for a loan. Its actually better to get your loan sorted beforehand. Youll know exactly how much you can afford to pay for a property. Once you find the right property, youll be able to focus on the purchaserather than having to sort out the finance at the same time. Youll have a better idea of what properties to look for, because you wont waste time looking for something outside your price range. With a pre-approved loan, there are fewer chances of hiccups with the sale process. Sometimes, sellers will accept an offer below list price, because they have peace of mind that the property really is sold. The seller can take the property off the market with confidence knowing the buyer is serious. If you decide to make an offer youll be in a position to move quickly if your finances are sorted this will help you avoid being gazumped.
Getting your loan pre-approved can make sense from both a peace of mind and time management point of view but speak to your broker or lender to work out the best option for you. What are the costs to consider? Before you apply for a home loan, you need to figure out how much you can afford to pay each month. Dont forget the extra costs The real amount you can afford in repayments is affected by your lifestyle and other commitments, such as other loans you may have. It will also be affected by the ongoing costs involved in owning your own home, such as: Land and water rates Electricity and gas Strata charges General maintenance To get an accurate grip on these figures, youll need to do a budget. This will show what your expenses (outgoings) currently are, and how much you have left over from your income. You can also get an idea of how much a typical lender would be prepared to lend to you by using our Borrowing Power Calculator. Then use the Loan Repayments Calculator to work out what the monthly repayments would be on various figures.
pg. 6
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Youll then have a pretty good idea of the costs involved in taking out a home loan, and how much you can afford without overstretching yourself. Other costs to factor in When youre buying a property, there are also costs associated with the purchasing process. Youll need to budget for: Stamp duty Pest and Building reports A strata search (usually if youre buying an apartment) Conveyancing costs (the legal fees) Loan application fee Insurance, which could include Lenders Mortgage Insurance and your own Mortgage Protection Insurance as well as property insurance To get an accurate understanding of these costs, its a good idea to meet with a broker or your lender early on. Youll then know what to expect, and can budget accordingly. The two types of stamp duty youll pay Stamp duty is a tax that you need to budget for when buying your first home. There are two types you need to be aware of: Duty paid on the transfer of the property to you. Duty paid on the mortgage you take out to pay for the property.
Stamp duty is charged by the state and territory governments, and the amount will depend on where you buy the property. It will also vary according to the purchase price of the property. The good news is that first home buyers qualify for some stamp duty concessions. For more information take a look at the website of the revenue office in your state or territory: ACT | NSW | NT | QLD | SA | TAS | VIC | WA You can also calculate how much duty youll need to pay by using our handy Stamp Duty Calculator. The 5 different loans youre likely to meet There are hundreds of different loans out there in the mortgage marketplace. But fundamentally, they are all based on two things: Principal the amount of money you borrow. Interest how much you pay to borrow the money. Its calculated on the outstanding principal. The differences youll come across are the type of loan and the type of features that come with the loan. Here are some of the most common types of loans youll find. Fixed loans Interest rates and repayments are fixed for a set period, usually between three to five years. This makes it easier to budget. Find out more about fixed loans.
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Variable loans
This is the most popular type of loan in Australia. The interest rate (and your repayments) will vary throughout the term of the loan, so they may rise or fall. The rates are usually lower than fixed rates. Find out more about variable loans. Split loans This loan can give you the best of both worlds. You fix one part, and let the other part vary according to market fluctuations. Find out more about split loans. Low-doc loans These loans are mostly for self-employed people who dont have all the financial documents normally required to get a loan. A low-doc loan can be either fixed or variable. The rate is generally higher than a standard variable or fixed loan, but this is usually reduced after a few years if your repayments are on time. Line of credit This type of loan allows you to draw from a fixed amount at any time, to pay for whatever you wantwhich could be shares, renovations, or even a holiday. Its like having a credit card with a big limit, but your home still acts as security for the loan. You only pay interest on the funds you use, but you need strong financial discipline to ensure you pay off the principal as well as the interest.
pg. 8
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Decision: fixed, variable or split loan?

There are several different types of loans, but many first home buyers choose either a fixed or variable rate loan. If you want the best of both worlds, you can hedge your bets and borrow a portion of money in a fixed rate loan, and a portion in a variable rate. Thats known as a split loan. To help you decide which loan would be right for you, here are the pros and cons of fixed, variable and split loan types:
Fixed rate The available interest rates are likely to be slightly higher than the variable rates on the market Your repayments will stay the same for the fixed period of the loan Fixed repayments make it easier to budget If you break the loan (perhaps by selling the property) during the fixed term, youll probably pay exit fees You cant usually make extra payments or re-draws without penalty. Variable Your interest rate and repayments are likely to be slightly lower than a fixed rate at any given time Your repayments may fluctuate with interest rate changes, this could be up or down so you will need to factor in a buffer You could pay off your loan faster by making extra repayments There are unlikely to be any exit fees Split One part of your loan will be fixed and the other can fluctuate with the market Interest rates can go up and affect the variable part of your loan Allows you to have interest rate security with repayment flexibility Most lenders will let you set the portions on how it suits you You can access variable loan features like redraws and extra payments but have a little more certainty around your long-term budget
You can make extra payments whenever you like
The above are typical examples of the various types of loan features. Each loan has its own specific feature, so check your loan carefully..
pg. 9
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Understanding Mortgage Broking

Do you need a mortgage broker A mortgage broker can be a very useful partner for a first home buyer. The broker will assess your financial situation as part of a needs analysis, and match your requirements to a wide range of loans from banks and other financial institutions; managing the process right through to settlement. Here are some reasons you might consider using a broker: Brokers will offer loans from lenders they are accredited with, known as their panel of lenders. These lenders may include the large banks, plus specialist non-bank lenders and mortgage managers. A broker will search for a deal that meets the customers needs, from their panel of lenders. This provides access to a large range of loan options without the customer having to do any of the leg work. A broker has access to loan rates at his fingertips, as well as fees and charges so a clear loan comparison can be made. Brokers also have good relationship with lenders so can usually negotiate a very competitive rate. Lenders receive a significant amount of business through the broker channel so its in their best interest to work closely with brokers. The brokers experience in the mortgage industry will help you make informed decisions and allow you to feel confident throughout the process.
The best news is that generally you wont need to pay your broker: the broker gets an upfront commission from the lender on the loans they settle as well as a trailing commission. Bear in mind that not all brokers have the same level of qualification or experience. The Mortgage & Finance Association of Australia (MFFA) sets the highest industry standards and its members are required to adhere to a range of Code Practices, laws and regulations. To find an accredited, reputable broker, contact the Mortgage & Finance Association of Australia. What to expect when you meet with a broker Will usually take around an hour, and in that time, a qualified broker will: Ask what you are looking for in a home loan and understand the particulars of your situation Calculate how much you can borrow and what your repayments will be so youll know what sort of range you can buy in. Help you choose the loan and associated features that meet your needs from a panel of lenders. Explain the application fees and other charges associated with a loan. Explain the home buying process end-to-end including making an offer, getting legal advice, exchanging contracts and settlement.
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The broker can also take you through some helpful information like: What is Lenders Mortgage Insurance and will you have to pay for it? If you qualify for the First Home Owners Grant, how can you access it? How you could save by consolidating your debts? The broker will walk you through the application for the loan of your choiceif and when you are ready. Most loan applications can be lodged online, but youll need to have some documentation and information handy for the broker to see. The documents youll need will depend on the type of borrower you are, and the type of loan youre after. Your broker will tell you what you need to submit to the lender youve chosen. You should feel informed and confident in the next steps in the process when you leave your first appointment. And the good news is, the broker will be with you every step of the way so you never have to worry.
pg. 11
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Thinking Looking Should you use a buyers agent? Buying your first home & real estate agents The critical property checklist Questions to ask when youve found a property How old is that building? The 7 costly mistakes to avoid Finding Moving
Looking
A buyers agent assists people who are buying a property. They are becoming more common in Australia, and for good reason.
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Should you use a buyers agent

A buyers agent assists people who are buying a property. They are becoming more common in Australia, and for good reason. You may get access to more properties, including those that arent advertised, through the agents contacts and network. You can make better use of your time. Instead of searching the newspapers and internet every weekend, someone else does the hard work shortlisting suitable properties. Youll have a professional negotiator who can help obtain the lowest possible price. This can be handy when it comes to Auctions. Youll eliminate wasted time from being shown inappropriate and unsuitable properties by real estate agents. Many properties sold are silent sales that are never publicly advertised. A buyers agent can help you find these. The agent will usually charge a fee up front, and may also take a small percentage of the property purchase price. For an all inclusive service you may be looking at around 1% of the property price. You should check this beforehand, and also check that the agent is licensed and does not accept sales commissions from vendors or developersif they do, they are not acting entirely in your interest.
A good place to find a buyers agent in your area and get an idea of fees is the Property Buyers Agents Association of Australia.
pg. 13
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Buying your first home & real estate agents

Give yourself room to move When you make an offer, pitch it below the price youre actually prepared to pay. Very few properties sell for the price initially offered, but many sell for a price just above the first offer. Dont take rival buyers for granted Sometimes an agent will say theres a higher offer on the table than the one youve just made. Unfortunately theyre not obliged to disclose the higher offer and you will need to decide whether to make a counter offer. Put your offer in writing Estate agents are obliged to submit all offers to the seller, so make sure that you submit your offer in writing. This formalises your offer however be aware that the vendor can still accept a higher offer from someone else. The offer and acceptance is only complete once contracts have been exchanged.
Estate agents are effectively salespeople acting for the buyer, and the agents objective is to sell a property to you for the highest possible price. Follow these tips and tricks to make sure you stay on top of everything related to buying your property: Keep your cards close to your chest The one thing the estate agent wants to know is how much you like a property. It can give them extra bargaining power at negotiation time. So it can be a good idea to down play how much you like the property, especially if youve got your heart set on it. Act cool and keep your excitement to yourself. Do your research Find out how much other properties in the area have sold for recently. Go to auctions and learn as much as you can about local property market trends. This is essential for two reasons: firstly, youll know what a reasonable market price is for the property you like, and secondly, you wont waste money by going in too high.
pg. 14
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The critical property checklist

Get home loan pre-approval It can be heartbreaking to find the perfect place only to learn that you cant afford it. Even worse is losing your deposit because you won at an auction but couldnt secure finance for the balance of the purchase price. Dont risk it. Take notes and use checklists Turn your priorities into a personalised home-shopping checklist and use it to track the features of each home.
What are you looking for in your first home? Having a clear idea from the start will save the amount of time you spend searching on the net and staring in real estate agency windows. Here are some things to tick off on your mental checklist: Location How far are you willing to travel to get to work? How good are the local schools, shopping centres and other public facilities like parks and sporting grounds? How convenient is public transport? If youre prepared to renovate, think about that other real estate clich thats stood the test of time: Pick the worst house in the best street. Make a list What do you like about where you currently live? What dont you like about where you currently live? or really need? What are the essentials: balcony, laundry, garage, views etc Do your homework Check out recent home sale prices and auctions in your preferred areas. Look at market trends, houses for sale and suburb statistics.
pg. 15
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Questions to ask when youve found a property

Some other questions for apartment hunters: Is the property Foxtel enabled? Does the apartment above have floor boards? Does the body corporate allow BBQs on the balcony? Is there much noise in the building? What % are tenants vs. owner occupiers? Is there visitor parking?
If you know the vendors reason for selling a property youre interested in, it can help you in your negotiations. Estate agents often advise their clients not to give a reason for selling, or to simply say relocation. But there is no harm in asking, either directly or indirectly. Sometimes an estate agent will let slip that the vendor has already bought elsewhere, or needs to move for their job. Reasons such as these suggest that the vendor will be looking for a quick salesomething that you can factor into your negotiations. Other questions that will help first home buyers are: When does the vendor need to move out of the property? How long has the property been on the market? How many offers have been made on the property? Has the property been passed in auction (and if so, what was the highest bid?) Is the vendor open to offers before Auction? How long have they owned the property? The answers you get to these questions will obviously give you an insight into how negotiable the price is.
pg. 16
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How old is that building?

Its tempting to view properties as commodities: when youre looking at lists of recent sales, youre correlating location with price and facilitiessuch as the number of bedrooms and bathroomsand perhaps the floor area, and size of the land. The quality of a property is harder to assess, and it needs to be taken into account. If its an older property the construction quality will be critical, from weathersealing on the roof to the condition of the external walls and whether or not any structural faults (such as cracks) have developed. An older property is not necessarily a bad thing: many older buildings have higher levels of craftsmanship, and if theyre built using brick or stone, are inherently strong. The key with these properties is to ensure that they have been maintained well over the years: the last thing you want after taking out a mortgage is to find that youre going to be hit with expensive repair work. Thats why its a good idea to get a building and pest report commissioned before you start negotiating on price. If there are no faults, thats good news. If faults do appear, you can use the reports to reduce the price youre prepared to offer. The minutes and budget forecasts in the property strata report can also be a useful source for uncovering potential building problems. Building and pest inspections mean you can buy with confidence
pg. 17
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The 7 costly mistakes to avoid

These are the most common mistakes that first home buyers make. Make sure you dont fall into these traps: 1. Changing jobs or making a major purchase at the same time as applying for finance. 2. Not getting your finance pre-approved, and leaving everything too late when the right property is found. 3. Borrowing right up to the amount the lender is prepared to loan you, and then getting over-stretched financially. 4. Letting emotions take over in the negotiation process, and paying too much for the propertyor missing an opportunity to negotiate more favourable purchase conditions. 5. Not checking out things such as council zoning, building approvals and restrictive covenants. 6. Buying a do-up and then running out of money. Renovation is not a cast-iron route to riches, and if it turns out to cost more than you bargained for, you could be living in squalid circumstances for too long. 7. Forgetting to sort out property insurance well before you move in, and forgetting to tell the utility companies.
pg. 18
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Thinking Looking Finding
Finding
Buying a property is an emotional process, and its best to keep those emotions under control at all times.
What is conveyancing How to make an offer - private treaty How to handle an auction How to handle a private sale (no agents) Steps to buying your chosen property Knowing the cooling off period Do you need insurance
What is settlement?
Moving
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What is conveyancing?
Thinking Looking Finding What is conveyancing How to make an offer - private treaty How to handle an auction How to handle a private sale (no agents) Steps to buying your chosen property Knowing the cooling off period Do you need insurance
Conveyancing is the legal process you go through when buying a property. Aside from legally transferring ownership, conveyancing can help you to identify and avoid potential problems with a property. The role of the conveyancer includes: Giving advice on the property contract Facilitating searches on strata reports Ordering any pest and building inspections Arranging for the exchange of contracts for sale Negotiating with the vendors solicitor on the buyers behalf Arranging the settlement process and dealing with any difficulties that arise during the settlement period. When choosing a conveyancereither a solicitor or a specialist conveyancing companymake sure you know exactly what service they are offering, and what their qualifications are. A low price can mean that the service is just the legal minimum of filling in the forms. Whereas a more expensive quote could cover advice throughout the process.
What is settlement?
Moving
pg. 20
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How to make an offer - private treaty

Examples of how to make an offer Please see below an example of how you might consider wording your offer. Important to note that the actual wording should be determined by your individual circumstances and the below treated merely as a guide. Dear {Real Estate Agent} Further to our inspection yesterday and review of the contract we would like to place a formal offer of AUD $$$$ for the vendors consideration on {property address}. This offer is subject to: 1. Legal review of the contract and strata report; 2. Property valuation; and 3. Any other requirements as necessary. As we are in a position to move quickly, we are also happy to discuss earlier settlement timelines with the vendor. Should you have any queries or feedback please contact me on ph xxxxx or email xxxxxx Regards, {Name}
Most real estate agents will list the price of a property at around 5-10% higher than the figure the vendor has in mind. In theory, you should have an educated guess at the price the vendor wants, and then pitch your own offer at some point below that. Some other tips to consider:
If you have time, it may be worth getting a professional valuer to value the property. Check with your chosen lender to ensure that the valuer you use is one who is also acceptable to the lender. When youve arrived at a figure, put your offer in writing to the agent. Specify how much you are willing to pay, and any conditions that you want to attach to the offersuch as repairs required, the deposit you will put down, and perhaps a timeframe for moving in. The real-estate agent is then obliged to pass this offer on to the vendor. Youll just need to sit back and await a response at which point, the negotiations will probably begin.
What is settlement?
Moving
pg. 21
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How to handle an auction

Buying a property is an emotional process, and its best to keep those emotions under control at all times. This is hardest in the pressure-cooker environment of an auction situation. If youre competing against another buyer who has their heart set on the property, this can drive prices up to an extraordinary level. On the other hand, its possible to pick up a great bargain. Its this element of risk and uncertainty, plus the theatrical aspect of the auction process, that adds to the emotional overload. Here are some tips you could consider if youre likely to be involved in an auction: Attempt to purchase the property before it goes to auction. That way, you can use your knowledge of the market and the vendors circumstances to swing the process in your favour. After all, the vendor will be nervous before the auction too, and may be tempted to accept a reasonable offer and avoid the uncertainty of the auction process. (Tip: the only downside to this approach is that if the auction goes ahead, youve indicated how much youre prepared to pay). Go to a couple of auctions on properties that youre not intending to buy. Observe the process and the way the auctioneer runs the show. Take note of the strategies employed by those who are successful. Before the auction, get your solicitor to check the contract and strata report. Check with your lender that youre
covered and make sure youve received pre-approval on lender letterhead before the auction. Make sure youve had the necessary inspections done on the property, because when the hammer falls, the winning bidder is legally obliged to purchase the property. Check the terms and conditions that come with the property sale. If you want to change these, make a request. You dont need to accept the terms laid out, and equally, the vendor doesnt need to accept the changes youre requesting. But it is always worth enquiring. Before the big day, in your mind, set the absolute maximum price youre prepared to payand stick to it in the heat of the auction. Winning bids are usually just over a round figure, so bear that in mind. Its the little bit extra that knocks the opposing bidder out of the game. TIP: Deposits required on the spot are usually 5-10% of the purchase price but need to be negotiated before auction. Its a good idea to have the deposit made out to 5% or 10% of your maximum price to ensure you dont go over your limit during the bidding. If you think that this sounds like a stressful process for both the buyer and the seller, youre right. And if youre not sure of your abilities to handle that stress, consider getting a Buyers Agent to bid on your behalf and advise you in the run-up to the auction.
What is settlement?
Moving
pg. 22
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How to handle a private sale (no agents)

Some sellers prefer not to use a real-estate agent, and will attempt to sell their property themselves. They may have had a bad experience with an agent in the past, or theyre unwilling to pay an agents commission. Whatever the reason, you need to moderate your approach as a buyer: it is easier to negotiate with a dispassionate intermediary such as agent than with a seller who may be emotionally involved in the sale. The seller may also have a more inflated view of the worth of the property, and may be reluctant to budge on price. There are no hard and fast rules here, except to use more tact and to always explain your reasoning very clearly when negotiating price. You should also work closely with a lawyer to ensure that all documentation is above board, and correct legal processes are being followed. (In sales handled by an estate agent, the agent will keep an eye on this on behalf of the seller.)
What is settlement?
Moving
pg. 23
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Steps to buying your chosen property

Your legal rep should also: Check that all property rates and taxes are paid up, and that the seller is actually entitled to sell the property Help you sort the property inspections that you should do before you exchange contracts The cooling off period If you have bought through private treaty rather than at auction you get a cooling off period after the contract is exchanged. During this period you can cancel the contract but there may be a small penalty. The cooling off period varies from state to state and WA doesnt have one at all. Between exchange and settlement The time between exchange and Settlement is usually six weeks although this can change if both you and the seller agree to extend or reduce it. This is the time when you should: Arrange the balance of the purchase pricethat is finalise the finance and sign the mortgage documents. Insure the property At the same time, your lender will: Probably arrange for a valuation of the property Require you to take out building insurance effective from the exchangeunless youre buying a strata property
So youve found the one, and agreed on a price with the seller. Nows when the real paper shuffling begins. Well take you through the process step by step. Exchanging contracts The first important paper to be shuffled is a contract for sale. Neither you nor the seller is legally bound to go ahead with the sale until a written contract is exchanged. This contract usually details the: Property address Names of the parties (you and the seller) Selling price Terms and conditions Special inclusions in the sale like a dishwasher or blinds Date of settlement (the day you become the owner) Exchanging contracts is pretty much what it sounds like both you and the seller sign a copy of the document then swap them. You also have to pay the deposit at this time. Get legal representation Its a good idea to get a legal rep to arrange the whole property transfer process. While this contract is usually prepared by the sellers solicitor, your legal rep should check the details and make sure zoning, heritage or title restrictions dont clash with your intended use of the property.
What is settlement?
Moving
pg. 24
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Settlement
Settlement of the property is when the balance of the purchase price is paid, and the keys and title deeds are handed over. If you have a mortgage, your lender will receive the transfer document and title deed. Settlement of your loan usually coincides with settlement of the propertyits when the lender transfers the money youve borrowed as per your instructionsthis is usually to the seller. You also need to pay stamp duty at settlement
What is settlement?
Moving
pg. 25
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Know the cooling-off period

After youve signed the contract to purchase your property, you may have several days leeway before you are locked into the purchase. This is known as the cooling-off period. The laws vary according to state or territory, so you should seek a solicitors advice. Here are some key points to bear in mind:
Get legal advice as soon as you decide to cancel the contract and before you notify the estate agent or seller. Cooling-off periods are not applicable to properties sold at auction, commercial properties or farms. If you decide to rescind the contract, you must formally notify the agent in writing, and within a set number of clear business days after you (the buyer) have signed the contract. For more information about cooling off periods and to better understand your rights as a buyer visit your relevant Government website.
What is settlement?
Moving
pg. 26
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Do you need insurance?

There are three main types of insurance youll come across when buying your first home. Here is a brief overview: 1. Lenders Mortgage Insurance LMI is a type of insurance that most lenders require unless you can put down a deposit of 20% or more. It varies according to the size of the loan, and protects the lender from home owners defaulting on their payments. It is usually charged as a one off premium and calculated on a sliding scale. 2. Mortgage Protection Insurance MPI is a type of insurance you take out to cover your home loan. Its not mandatory, but its a very good idea to have it. It takes care of some or all your mortgage payments if you get injured, become too ill to work, or even die. Costs will vary according to the extent of the cover you get. 3. Home and Contents Insurance This insurance covers your new home and the belongings you keep inside it. It covers your property from physical damage, such as fire or flood, or loss caused by burglary. Lenders will require your property to be protected, because they have a vested interest in it.
What is settlement?
Moving
pg. 27
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What is settlement
There are generally two types of settlement that happen with most property purchases: 1. Settlement of the property is when the balance of the purchase price is paid to the seller. The buyer receives the keys and becomes the legal owner of the property. 2. Settlement of a loan coincides with settlement of the property. Its when the lender transfers the borrowed funds to the seller or the sellers mortgage holder. The majority of people hire a conveyancer to handle the transfer of the property. Once the settlement is complete, you will need to transfer the name of the property from the vendor to the yourself (the buyer). This is called the Registration of Titles, and incurs a separate fee. Then the home is officially yours.
What is settlement? Moving
pg. 28
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Thinking Looking Finding Moving How to choose a removalist Moving checklist
Moving
Moving can be an extremely stressful time and it is important you take as much stress off yourself in this time. There is where a removalist comes in handy, choosing the right company can save you time, energy and money.
Smart packing tips Once youre in your new home Tips for moving with kids
pg. 29
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How to choose a removalist

Moving can be an extremely stressful time and it is important you take as much stress off yourself in this time. There is where a removalist comes in handy, choosing the right company can save you time, energy and money. When choosing a company to help you with your move: Get a number of quotes each company is different and may offer a number of different services. Be sure youre getting the right deal for you. Ask your friends or family for any feedback on any companies they have had experience with. You can obtain a list of qualified companies from the Australian Furniture Removers Association Make sure you trust and feel comfortable with your chosen company as they will be in charge of all your valuables on moving day. Book well ahead to ensure your chosen company is available on your moving day. Before moving day, make sure you get a contract finalised with your removalist. Ensure that the terms and conditions of the contract are clear and all costs are included in the agreed quote. Under Australian law, removal companies do not have to carry insurance and in most cases, because your goods have not been packed by the removalist, they take no responsibility for your contents in the event of damages. Check if your current contents insurance covers moving,
otherwise you may need to look into transit insurance for all your items to be covered for moving day. There are special removalist companies who deal with valuable goods such as antiques. If you have a lot of valuable items it might be best to go with a company you know has experience handling these types of items. Some removalist companies include extras in their services. If they dont include cleaning, you may need to organise an additional cleaning service for your previous or new residence after the move.
pg. 30
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Moving checklist
Pre-book your removalist and get an official quote Check the weather in the lead up to moving day Have a garage sale or organise a charity donation for all your unwanted items Remember to cancel your phone / internet and transfer to the new location If you have pets, plan what you will do with them on moving day perhaps book them in for boarding on the day Check your insurance on your items make sure theyre covered while you are moving. You dont want to lose / break something that is valuable and then not be covered Remember to empty your fridge and drain your washing machine for the move
pg. 31
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Smart packing tips

Start packing about 6 weeks before you move so you dont have to rush and end up forgetting things. Write a list of items in each box so you can move and remember whats in each box. Instead of buying boxes why not hire them. Boxes are picked up for free after your move so you dont need to worry about them. Label boxes as fragile so the delicate items are treated more carefully. Count the number of boxes you have once everything is packed to keep track of all your items. Put all liquids in waterproof bags nothing worse than spilt liquid throughout your clean boxes. If youre transferring cupboards with draws keep the clothes in the draws so you dont need to pack and unpack the items again. If you have to take furniture apart to move it tape screws, bolts and other loose items to the underside of furniture so you dont lose any.
pg. 32
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Once your in your new home

Check which day your bins are collected in your new area. Work out where your local services are located e.g. doctors, plumber, electricians etc. Redirect your mail and update your key contacts on your new address. Australia Post can help with the re-direction for a set period of time. This will help you remember which companies to notify of your address change. Get a realistic deadline to unpack in and dont move it. Otherwise you could keep unpacking forever!
pg. 33
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Tips for moving with kids

Moving home is a huge stress on the entire family especially if you have kids as part of the process. It can also be an extremely stressful time for your kids. Here are some things to help you out when moving into your new home. Plan your move It is important to include the kids in the moving process. Let them know when moving day is and what they should expect. They are also moving out of their home, and it is important to manage their feelings and fears for the move. If possible, take them to the new house so they can see where they will be living and get excited about the change. Keep the idea of moving positive, talk about the positive aspects of moving and try to exclude them from the stress of it all. If they are moving into a new area, let them say goodbye to their friends in the area so they have closure. This will also decrease the amount of anxiety they feel about the change. Moving day If it is possible, organise for family or friends to look after your kids on moving day. This will mean you have one less thing to worry about on the day. When packing make sure you have access to all the items your children will need e.g. nappies, medication, blankets, pyjamas etc. It is a good idea to pack an overnight bag for each of the children so that they have all the essentials handy.
Get older children involved in the process; this is a great way to keep them feeling positive about the move and also for them to give you a helping hand. Let them be in charge of packing their items, so they can understand the process and learn from it. Keep snacks and drinks handy so you dont need to worry about finding food and drinks on the day for the kids. The new house As this is a new environment your kids may not know the safe areas to play. Make sure you take them around the home and outline the best places to play and also point out any potential hazards. To reduce the anxiety of the new home, set up a routine from day one, show them around the new neighbourhood and talk to them about the new house and the changes.
pg. 34
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put yourself in a better place

first home buyers guide

Moving from renting to owning

Saving and your deposit

Choosing the right loan and considering the costs

Decision: fixed, variable or split loan?

You can make extra payments whenever you like

Understanding Mortgage Broking

Should you use a buyers agent

Buying your first home & real estate agents

The critical property checklist

Questions to ask when youve found a property

How old is that building?

The 7 costly mistakes to avoid

Thinking Looking Finding

How to make an offer - private treaty

How to handle an auction

How to handle a private sale (no agents)

Steps to buying your chosen property

Know the cooling-off period

Do you need insurance?

What is settlement? Moving

Thinking Looking Finding Moving How to choose a removalist Moving checklist

How to choose a removalist

Smart packing tips

Once your in your new home

Tips for moving with kids

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