This page is designed to give you tips to help you to avoid making some common mistakes after mortgage pre-approval. Show
First home buyers will also get a basic understanding of the home buying process. If you don’t do your homework properly or don’t have professional advisers (like us) then you risk making costly mistakes. Beginning to look for a propertyWe recommend that you use several different sources to look for properties for sale: Believe it or not, there are still quite a few properties that aren’t advertised online! You can find these properties by talking to the real estate agents directly, by looking at their agency windows or by checking the real estate section of your local newspaper. Some properties are only advertised on either realestate.com.au or domain.com.au, not in both. So it’s important to use both websites when searching for property. If you want to get the best possible results then consider the following tips:
Bad agents can be your best friendsIf you come across an agent who doesn’t return phone calls, has inaccurate listings or is unprofessional then it’s important that you ask to see all the properties that they have for sale. In many cases, they have one or two listings that have been sitting there for months without a single person inspecting them because they’ve failed to effectively advertise the property. Unprofessional agents just want to get the sale completed, they aren’t interested in getting the best price for the vendor. In many cases, they’ll let you know what price you should offer or will tell you about the vendor’s circumstances. Not all properties are OK for the lender!Did you know that the banks don’t accept some properties as security for a home loan? So even if you get pre-approval, and you decide to buy a certain property type, your loan may be declined. This is because a pre-approval is always subject to the lender accepting the property that you buy as security. Where you have concerns, it’s best to check with us before making any offers. As a general rule, the property you’re planning to buy must meet these criteria:
There is a full list of the types of properties that are considered to be “non standard” on our property types page. We recommend that once you find a property you like, please email your mortgage broker with a link to the listing for the property in Domain or Realestate.com.au. We can then inform you if there appears to be any aspects of the property that may be an issue for some lenders. Choosing a conveyancerWhile looking for a property, you’ll need to find a conveyancer or solicitor to help you with the legal documents associated with the purchase. A good conveyancer will ensure that you’re protected & well advised throughout the process. We have a list of recommended conveyancers & solicitors. However, we don’t have one for every state. Please use a good conveyancer, not the cheapest one you can find! They’ll be assisting you with a very important transaction and their expertise is essential. A solicitor & a conveyancer essentially do the same thing, although they do have slightly different qualifications. In WA, you’ll need what’s known as a Settlement Agent who will handle the transfer of the property into your name. Making an offerOnce you’ve found a property you want to buy, we recommend that you discuss the property with your conveyancer and seek their advice. Although we have some basic tips below, it can’t be substituted for specialist advice from a conveyancer who works in this field.
As a general rule, you should offer 10% below their asking price. However, this varies significantly between markets. It can be very difficult to negotiate a lower price in high demand markets close to the CBD or near the beach. Agents often have a “take it or leave it” approach & refuse to bargain. In quieter markets in some of the outer suburbs, you may be able to put in an offer 15% or so below their asking price. The conditions on your offerWe recommend that our customers ask for a two week cooling off period or finance clause to allow time for the bank to arrange a valuation & the final approval. Although the banks usually take far less than two weeks, it’s better to allow extra time just in case they make an error with their processing. In some states, it’s mandatory to have a two or three week finance clause to allow you as the purchaser to sort out your final loan approval before you’re committed to the purchase. However, in very competitive markets such as Sydney’s suburbs of Mosman or Bondi, it can be near impossible to get the agent to agree to have any cooling off period at all! You should talk to your conveyancer to confirm which conditions should be included with your offer. The below list are our suggestions only:
What if you can’t get the agent or vendor to agree to a cooling off period or finance clause? This means that there’s some risk involved in purchasing the property. It’s possible that the lender may not formally approve your loan and you may be unable to complete the purchase. This means that you’ll lose your deposit. Unfortunately, for some purchases, taking this risk is unavoidable. If you can’t get a cooling off period then please talk to your conveyancer & your mortgage broker to discuss the risks involved before proceeding. Inspections & reportsYour conveyancer will know which inspections & reports you should order for your property. We strongly recommend that you order all available reports; the cost of an inspection is far less than the cost of buying a property with termites!
Your conveyancer or solicitor can usually recommend a good building inspector & strata inspector. We recommend that you go to the property with the inspector, so that they can explain everything to you in more detail. You’ll probably be inspecting the roof and other areas, so it’s advisable to wear older clothing. Don’t commit to buy just yet!Before you pay your deposit and commit to purchasing the property, please call your mortgage broker and conveyancer to confirm that it’s OK to proceed. Buying at auctionIn Melbourne, almost all properties are sold at auction, whereas in most other cities, auctions are only used for high demand properties. If you buy at an auction then you’ll be committing to buy before you have formal loan approval, so you’re taking a risk! You’ll need to order your inspections before you go to the auction, and if you don’t win the auction then you have lost the money for your inspections. In some states, the vendor will order the inspections and provide them to the prospective buyers so that they don’t all need to order their own reports. You must talk to your conveyancer about how auctions work in your state & the risks associated with buying at an auction. Paying your depositMost people negotiate to pay a 5% or 10% deposit as a cheque. The funds are then held in the agents trust account or a solicitors trust account until settlement. Again, this varies depending on the state you’re in. It’s common in QLD & WA for the deposit to be much smaller than 5%. How can you pay a 5% deposit if you’re borrowing 100% of the property value with a guarantor loan? You can get what’s known as a deposit bond, which is a guarantee to the vendor that you’ll complete the purchase. A deposit bond will usually cost you around 1.2% of the amount of the deposit, as a once off fee. The vendor will need to agree to accept a deposit bond instead of a cash deposit. If you’re going to an auction then request this via your conveyancer, several days before the day of the auction. Please use our deposit bond calculator to compare deposit bond quotes from several insurers and then contact one of our mortgage brokers to apply. Call 1300 889 743 or complete our free assessment form today! After your offer is accepted / You have won an auctionOnce you’ve successfully won an auction or have had your offer accepted, it’s time for us to help arrange your formal loan approval! Firstly, send us a copy of the contract of sale:
In addition to the contract, we’ll also need some other documents: Still confused?If you have any questions about the process of buying a property then please ask your conveyancer as they are the experts in this area. If you have any questions regarding how a loan process works or how long it will take to get home loan approval then please call us on 1300 889 743, fill in our free assessment form or post your question on the Disqus section below. Does preWhen you're pre-approved for a loan, it means the lender provisionally agrees to lend you the money, based on the preliminary information you give them. It doesn't mean you are guaranteed to get the loan. Final approval for the loan will be subject to a hard credit check and other final checks.
What happens after you have been preOnce you've successfully completed the online pre-approval process, you will be issued a home loan pre-approval certificate that you can give to an estate agent or potential seller to improve your chances of buying a home.
How long after preGetting your pre-approval letter could take anywhere from a few days to a few weeks. On average, it usually takes less than 10 days. If you have everything in order, and your credit is good, you can get it in 1 or 2 days. How long does the underwriting process take?
How good is a preA preapproval letter just says that a lender is willing to lend to you – pending further confirmation of details. A preapproval helps you shop for a home, because it lets the seller know you are a serious buyer.
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