Buying first home - need advice

[supersoniceagle]

Hi all,

My fiance and I have just started looking for a property and I was just wondering what needs to be done prior to purchasing. Saw a place today which really stood out and I'm keen to go for it. It goes under auction next week and thus far we haven't done anything.

How long does it take to find out how much you can borrow from the bank, and what do I need to provide? (I assume pay slips, bank statements etc)

How much deposit is required, 10%? And how long do you have to pay it?

Do I get someone to do a building inspection now? How long does it take, and what exactly are they looking for?

What questions should I be asking of the agent?

Is there anything else that needs to be done?

And finally, do I need to do anything specific as it is an auction?

Sorry for all the questions, any help appreciated!

Cheers

 

[EvolutionUber]

10 % on the day of purchase.
You know about waiting periods yes?
Also if you go to an auction make sure you set a limit and don't get carried away with the emotion.

I have a cert 4 in it.

 

[Ausguy]

Auction next week? and youve done nothing yet?

Dont be offended, but if i was you id take it down a gear... take your time with the purchase, it will EASILY be the biggest thing you ever buy.

Have you looked at many other places? This isnt a tank of petrol mate... dont jump at the cheapest or nicest until you have crossed all the T's and dotted the i's.

First thing... find out how much you can safely borrow... then knock 50K off it, make that your target... the bank wont care if you over committ... they get your house when you cant pay for it...

buyer beware.

 

[innsaneink]

Give it some time....give it a good few months.
I just ''bought'' a few months back ( will be buying it for a while but one day its all mine and Im rent & loan repayment free)
Youve just started looking in winter....things look better in summer, a better place will come around.
As for auctions, you need to get a building/pest inspection before the auction if you register to bid.....you do your dough though if youre outbidded.
Lots of good info here
http://www.domain.com.au/firsthomebuyers

btw what are you looking for and where?

 

[supersoniceagle]

Thanks guys, might bide my time for a little while and see what else is out there.

How much is a building/pest inspection?

Currently looking in the Marsfield area for townhouses/apartments although I'm open to other areas. Being near a train station is pretty important due to my work

 

[innsaneink]

My building /pest insp. was $520 incl GST.....I budgeted $700 for it.

I was looking to buy roughly the same area too, anything east north and south is roughly the same price.....west of parra is another price bracket altogether, much cheaper and not much further distance

 

[T. Rubble]

Don't know how things work down there, but in the U.S., if a home is up for auction, you want to be careful of the neighborhood. Not saying auctions are bad, but how many other homes in the neighborhood are either for sale or up for auction? (Then again, our housing market is only just starting to rebound from a HORRIBLE slump.)

The other HUGE thing that will be a determining factor for the quality of your neighborhood is the quality of the local schools. Even if you don't have kids or never want them, if you go to re-sell one day, being located in a good school district always helps with your re-sale. It also keeps your surrounding neighborhood from going completely under. (I've lived in three different time-zones here, and that has ALWAYS proven true.)

Hope that helps! Good luck on an exciting first adventure!

 

[juanfarkall]

The worst home in the best street and suburb will usually be a better buy than the best home in a bad street or suburb.
If it is your first home try to somehow accept that it will not be likely to be the last home you buy.Each house you buy is a stepping stone where you upgrade each time and eventually reach the level you want.
From memory Australians tend to move on every 7-8 years or so..

Don't be like a relative of mine who paid over $500K for a 3 bedroom place in Brisbane with barely 5% deposit without thinking about the possible consequences.... ie having children and likely loss of at least one income when Qld state govt next changes.Try to avoid a mortgage that is so big you become a slave to it.

 

[Houdini]

The bigger the deposit you have saved up, the better off you will be.

My partner and I brought a house earlier this year (but it wasn't through auction). Don't be afraid to speak to different banks/mortgage brokers to work out the best loan option for you.

They will need a copy of your last few bank statements, maybe last 2 tax refunds, employment information, what assets you currently own and what debt you currently have. They can give you an idea on the spot of an approximate loan amount and some will offer a "pre approval" before you dive in and take out the home loan.

And definitely don't rush into anything. Look into the areas you are interested and find out as much information as possible.

Don't buy without the building/pest inspection as you could easily regret it down the track. You will also need to get a soliciter to check all the contracts etc once you do progress to a vendor accepting your offer on a place.

Good luck and happy house hunting!

 

[little_aza]

The golden rule of picking a residential detached property is to remember that the land and not the building is your main asset. The improvements on the land generally won't increase much above inflation, but due to supply and demand, your main investment is the land. Consider that first and foremost as usually it's only that which will make you your money. I don't know a lot about Sydney, but it looks like an area for strong growth.

Something to also consider when it comes to mortgages are the extra/early payments you can make to pay off your loan quicker. You'd be amazed at how much interest is saved by paying it off earlier. For example, on a $500k loan for 25yrs at a rate of 8.5%, if extra payments of $2 day were made (i.e. spending no extra, only paying earlier) over the term of the loan you would save $40,000 in interest alone...food for thought...

 

[besthalfbackPEARCE]

I bought a home a few weeks ago too. Good luck with it

 

[Danish]

The wife and I went from first starting to look for a place to laying down a deposit in 2 weeks, so I know what you are going through.

If the auction is next week, forget about it. The law on an auction is you must have the deposit ready to be paid on the day, and there is no cooling off period so if finance falls through you are out your entire deposit. When it comes to auctions, you simply MUST have your finances approved and inspections done prior to the day, so unfortunately that place is probably lost.

Financing can be sorted inside of 2 weeks, less if you have a 20% deposit saved up. I would suggest going to a mortgage broker immediately, any of them will see you to your schedule so organise it for tonight or tomorrow so you can see exactly where you are at. Then just start looking!

My one word of advice to you though is if you find the right place and it feels right, BUY IT. Don't shy away because you've only been looking for a few weeks. Houses don't come up for sale often, and you don't want to pass up on a place you love only to find yourself 6 months later still without a house and regretting it.

We laid down a holding deposit and signed a contract on the day we looked at our townhouse. Price was right, location was perfect and the place was packed with others looking at it so we literally followed the estate agent back to the office and put down cash on the spot (was around $1200 I think to take it off the market). Got our finances sorted and building inspections done before the cooling off period ended then put down the deposit and moved in 4 weeks later.

Was completely backwards, but in the end we got an absolute bargain (the unit next door recently sold for 20%+ more than we paid 18 months ago) and in the end the only risk we took was losing the $1200 if the finances or inspections went bad. Best risk I ever took.

Good luck with it

 

[madunit]

Hi all,

My fiance and I have just started looking for a property and I was just wondering what needs to be done prior to purchasing. Saw a place today which really stood out and I'm keen to go for it. It goes under auction next week and thus far we haven't done anything.

Austions are risky, you run a very real risk of paying overs for the property, especially in Sydney.

How long does it take to find out how much you can borrow from the bank, and what do I need to provide? (I assume pay slips, bank statements etc)

Getting that info from the bank can take between 2 and 4 weeks. Don't even consider using those quick calculators online, they essentially take your wage and multiply it by 6 to tell you what you can borrow, but when you start the application process, you may find you can't borrow anywhere near that amount (Factors include personal debt - credit cards, loans etc, how often you pay your debts late, skip debt payments etc, how much money you have in savings, assets etc)

How much deposit is required, 10%? And how long do you have to pay it?

At Auctions you need to pay at least 10% up front on the day. Otherwise, 10% should be the bare minimum. Some banks will let you take out loans up to say 97%. If you take out loans over 85% you will pay Mortgage Insurance, and this increases, as the percentage you need to borrow above 85% increases.

Most mortgage default lengths are 25-30 years, they will try to lock in you in for 5 years on a variable rate to start with.

Do I get someone to do a building inspection now? How long does it take, and what exactly are they looking for?

It's best to get a building and pest inspection. It will take them a few days to get back to you. Building inspectors aren't looking at cosmetic issues (cracking paints, tiles etc) they are there to ensure the structural integrity of the property hasn't been compromised, and that it is safe to live in, not just short term, but long term as well. They will also check lead and asbestos levels within the building, depending on what year it was built. Pest inspection checks mainly for fleas etc.

What questions should I be asking of the agent?

Agents are really only going to tell you whatever they can to make the sale more attractive to you. You can get a Comparative Market Analysis to show how much the property should sell for, based on its attributes and recent sales in the area. These can help you learn how much the property should be selling for.

Is there anything else that needs to be done?

Get a loan pre-approval first and foremost so that you know what you can borrow. If possible, try to buy a property at least 30k less than what you get pre-approved for.

And finally, do I need to do anything specific as it is an auction?

get up the front and stick to your budget very strictly!

 

[muzby]

Hi all,

My fiance and I have just started looking for a property and I was just wondering what needs to be done prior to purchasing. Saw a place today which really stood out and I'm keen to go for it. It goes under auction next week and thus far we haven't done anything.

congrats - it's a great step..

How long does it take to find out how much you can borrow from the bank, and what do I need to provide? (I assume pay slips, bank statements etc)

most mortgage brokers or banks can let you know within a day what your limit is, however approval can take 1-2 weeks.

How much deposit is required, 10%? And how long do you have to pay it?

if it's an auction, it's 10% on the day.

Do I get someone to do a building inspection now? How long does it take, and what exactly are they looking for?

get a licenced building inspector to check it out for you - it will cost around $200 or so for an inspection, but highly worth it. it's amazing how little focus some people can pay to their biggest investment - quite often people look through a house once or twice and then buy it without an inspection.. rather silly.

inspectors look for things like termites, damage to property / potential expenses in future like re-stumping, leaks and the like.

the risk is, with auctions etc it can get rather expensive doing inspections if you keep missing out at auction. if you can, look at private sales as you can make contracts subject to building inspection.

What questions should I be asking of the agent?

what drove you to work in such a scummy industry? was the used car lot not willing to take you? (i have a serious dislike for agents..)

but seriously, as any question you can think of - particularly settlement (how long till it's yours) what chattels are included (what parts of the house stay with the house - eg there may be a wonderful big heater there which you love, and it looks permanent, however it may not be there when you get the keys).

but always remember - the agent is working FOR the buyer. he / she will tell you whatever you want to hear (within the law) to ensure that you are extremely keen to buy it.

and you'll always hear about "other parties / couples who are just as keen as you are, so put in a high offer"

Is there anything else that needs to be done?

find a good conveyancer.

And finally, do I need to do anything specific as it is an auction?

bid


good luck

 

[miguel de cervantes]

keep renting

 

[my2centsworth]

Thanks guys, might bide my time for a little while and see what else is out there.

How much is a building/pest inspection?

Currently looking in the Marsfield area for townhouses/apartments although I'm open to other areas. Being near a train station is pretty important due to my work

If you are buying near a station pop into the council and check out the zoning/developments planned around it...If you buy a townhouse last thing you want is a 20 floor unit block on either side looking into your backyard

 

[sensesmaybenumbed]

There's plenty of good advice here, but I would agree that seeing a mortgage broker is a great step. Find one that gets the same commision from anyone, so they have no vested interest in steering you towards any particular lender.

And finally - try to get an offset account!
These work like this - say you have a mortgage of $200,000 and $20,000 in your offset account. You only pay interest on $180,000. It;s saved me a heap of cash, and the offset is accessible at any time - you just have to maintain the discipline to use it sparingly.

 

[supersoniceagle]

Thanks for all the advice guys. We did end up taking a step back and not rushing things, though we went to the auction as a spectator to get an idea. Met with a mortgage broker last night and should have pre-approval by next week sometime if all goes to plan.

Seen a few more properties which interest us so who knows, with a bit of luck we might have something secured within the next month or so

 

[my2centsworth]

Thanks for all the advice guys. We did end up taking a step back and not rushing things, though we went to the auction as a spectator to get an idea. Met with a mortgage broker last night and should have pre-approval by next week sometime if all goes to plan.

Seen a few more properties which interest us so who knows, with a bit of luck we might have something secured within the next month or so

Good luck with it !!!

We have been trying to buy on the lower North Shore within walking distance to the train lines and the amount of issues we have had with zoning and bush regulations etc has been fun..especially doing it from over here. If for any reason you have difficulty doing the legwork yourself I'd recommend a buyers agent..generally charge 0.5-2% of the value of the property but worth it for peace of mind

 

[innsaneink]

Take your time.....2 weeks to find & buy a house, LOL