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Affordable Plus Conveyancing

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Steps to buying a house in Australia

Posted on June 17, 2018 at 7:53 PM Comments comments (1282)
 
1. Are you ready?
The saying goes, “look before you leap”, and it couldn’t be more true than when considering purchasing a property. Before you leap into finding your dream home, take a breath and ask yourself the big question - “am I ready? If you’re still experiencing itchy feet and wanderlust then possibly you’re not quite ready for the commitment at this time in your life.
But if you think you’re all in, assess whether you have job security needed to make it work. High job security (12 months plus) will give lenders more confidence in you and will give you a better chance of getting your foot in the door.
If you have already have children then the urge to own your own home will probably be high. Unfortunately, the banks are fully aware of the costs involved in raising children, and for each dependent you have the amount you can borrow tends to decline substantially (in some cases by up to $50,000 per child).

2. Evaluate your finances and budget
You’re probably wondering how much you can borrow from the bank. Good question! The answer is determined by a multitude of factors. A mortgage is a massive financial responsibility and to get a good idea of where you stand it’s best to have an honest conversation with your accountant to figure out what you can afford. Knowing this will help when you start searching for a property.
Apply for a copy of your credit file and make sure you clear away debts. If you have bad credit, it might not be the best time for you to purchase a home or investment property. If you have multiple credit cards and loans to pay off, minimise these as much as possible. Reducing your limit on your cards will help you secure a larger finance amount. If you’re struggling to meet credit payments, reach out to your provider to help you renegotiate the terms of your payment schedule.

3. The cost of buying a house
It pays to seek advice from a financial advisor, accountant or lender to truly get the scope of the full costs associated with buying a home. Here is a list of costs you will likely incur:
  • Deposit. You need to come up with a 10-20% deposit to secure a home loan. To avoid paying Lender’s Mortgage Insurance (LMI), approximately 20% is required. Low deposit home loans do exist, but your mortgage insurance will be much higher and there can be a few more hoops to jump through.
  • Stamp duty. The amount of stamp duty tax you pay depends on the state you live in and is applied on the purchase value of a property.  
  • Legal and conveyancing fees. Depending on the amount of legal work required for conveyancing and other legal checks, you should put aside $1000-$3000.
  • Finance and insurance costs. If you’re borrowing more than 80% of the purchase price, than you will have to pay LMI to protect the lender if you fail to make your repayments. There can also be fees for valuations, applications and settlements. A mortgage application can cost $200-$600 depending on the lender, and a valuation could set you back about $400-$500 if the bank doesn’t waive the fee.
  • Building and pest inspections. Make sure you have a solid home or investment property by ensuring you complete a building and pest inspection. This should not be overlooked as it could cost you far more in the long run going without. Inspections average $500-$700 for peace of mind that the property is structurally sound and pest free.
Other costs to consider are ongoing mortgage repayments, utilities, moving costs, council rates and strata fees, home and contents insurance and mortgage protection insurance. Not to mention repairs and maintenance to your home. It’s wise to have $5,000-$10,000 in a savings account for emergency repairs.
  
Extra costs when buying an investment property
It’s essential that you cover maintenance, insurance, property management, council and water rates, land tax and body corporate fees (if applicable) on top of your interest payments, if you are borrowing. Lenders are tighter than they used to be and they expect a full 20% deposit.

4. Investigating mortgages and interest rates
Bonus points if you have your deposit ready, but you still need to shop around to find the right financing for you. Be careful to make sure you understand all the terms of the agreement. Find out about the:
  • Interest rate
  • Term of the loan (usually 25-30 years)
  • Whether you can redraw funds
  • Can you make additional repayments and are there conditions attached?
  • How often is the interest calculated?
If you don’t have a deposit saved, full finance of the purchase price may be an option by using your renting history as proof of savings or by having a parent go guarantor, but without equity there are more risks associated and you will be required to have full insurance.
There are two options with interest rates - fixed and variable. Your financial advisor can help your decide which will suit you best, there are benefits to both. A fixed rate mortgage would be suited to someone budget-minded. A variable home loan has a bit more risk, but gains are made when interest rates fall helping you to possibly pay off your loan quicker.

5. Getting home loan pre-approval
Otherwise known as conditional approval or approval in principle, securing pre-approval before even searching for your home is ideal so you can know your price range. By providing your bank or lender with your financial details - such as your credit report, savings, income and investments - they will be able to review the information and grant you with pre-approval to borrow up to a certain amount. Now you’re ready to go shopping!

6. Choosing the suburb and type of property
When riding the emotional rollercoaster of buying a home, it’s important to have a clear sense of what you are looking for. The list of priorities will vary for investors, singles and those looking to purchase a family home. Consider making a checklist of all your non-negotiable, “must have” requirements. Here is a list for wannabe homeowners to work from:
  • Location - close to work, schools, family and friends
  • Access to public transport, services and shops
  • Is there established infrastructure or plans to develop the area?
  • Suburb character - is there a good vibe and friendly community?
To find out where you can afford to buy, you can research property prices, and there is plenty of existing property market data to help you quickly find the median price of an area you are interested in.
Figuring out what type of property is right for you:
  • House, unit, studio, townhouse, acreage?
  • Do you have a style preference? Victorian, Art Deco, modern or a renovator’s dream?
  • The practicalities - how many bedrooms, bathrooms and parking spots?
 
 
Buying an investment property
When buying an investment property there are going to be a few different factors to consider than when buying a home. Establish whether you are going to fix it up and flip it or if you want to hold onto the property and rent it out.
A different set of criteria for choosing the type of property to invest in is necessary. For strong capital growth you need to find a property that will increase in value. This can take a while, but look for:
  • Areas with high rental yields compared to the property price
  • Research recent sale prices for an idea of prices
  • Is there a strong rental demand? Look for tight vacancy
  • Are there upcoming developments or zoning changes? What impact will they have?
  • Is there proximity to schools, shops, hospitals, public transport?
  • What will the maintenance costs be like?
  • How many bedrooms, bathrooms and parking spots?

7. Do I need a real estate agent or buyer’s agent?
Reach out to local real estate agents for information about what’s for sale, tips for buying a house in the area, what the area is like and how the property market is performing, along with any other general queries. Appointing a buyer’s agent is handy if you are looking to buy at auction, but they can also work to find suitable properties for you, negotiate with the seller, and complete background checks on the property - eliminating some of the stress in a stressful time!

8. Property inspections
As soon as you enter the home you are considering buying, you will get an immediate emotional response - negative or positive. While it’s easy to walk away when you get a negative vibe off a property, it’s much harder to do when the feeling is positive. A positive emotional response is very guiding, but don’t get too invested before making important structural checks, investigating the utilities and sussing out the new neighborhood!
Things to watch for:
  • Mould! Check for damp or mould spots on the ceilings, walls and skirting. Pay careful attention to areas with fresh paint touch ups.
  • Sagging ceilings or buckling walls.
  • Do the doors and windows fit right and open and close smoothly?
  • Test the taps for flow and even temperatures, and flush the toilets.
  • Check under carpets to see the condition of the floors.
  • Take a look under all sinks to ensure plumbing looks good.
  • Check the hot water system.
  • Lights and fuse box.
  • Roof, guttering and drains.
  • Exterior walls - check for cracks.
  • Inspect the neighbourhood and get a feel for whether it suits your lifestyle and requirements.
If you are sure you want to go ahead with purchasing the property, get a qualified building inspector to make an assessment. They will look for structural defects, pest infestations, faulty wiring, plumbing and drain issues, asbestos, lead paint, and more.

9. Preparing for Purchase
A licensed conveyancer can request inspections for you while also managing the exchange of contracts and other legal searches. Once you have found the property you want to purchase, get a property valuation to help you figure out the right price to offer.  
Finally, you are ready to make an offer! Don’t low-ball here less than 10% of the asking price, otherwise you may miss out when higher offers stream in. When you’ve decided on a figure, reach out to the agent and let them know how much you’re willing to pay and your deposit amount.
Next, simply exchange contracts and pay the deposit. Both you and the seller are not legally bound to the sale until the contract of sale has been signed and swapped. Included in the contract of sale is the:
  • Names of parties
  • Property address
  • Purchase price
  • Terms and conditions
  • Special inclusions in the sale
  • Date of settlement
If you’ve bought through private treaty you will have a cooling off period. This is not available when sale is made by auction. During this period you can cancel the sale if you change your mind, but you may be required to pay a penalty. The cooling off period varies by state.
In the time between exchange and settlement - generally six weeks - you should be busy arranging the balance of the selling price by finalising the finance and signing the mortgage. You will also want to insure your property, and you will be required to take out building insurance.
Once the balance of the purchase price and Stamp Duty is paid, the settlement of the property has been made and you will receive your keys and title deeds. Essentially, the lender will transfer your money to the seller and the property is ready for you to occupy!

10. Moving into your new home
You are almost ready to move into your home! Now you will need to sort out utility accounts, pack your belongings, and employ the help of a removalist and possibly a cleaner! Don’t forget to transfer the address on all your accounts and organise for mail redirection.
 
 

First Home Buyers Incentive from NSW Government

Posted on June 2, 2017 at 12:47 AM Comments comments (495)
The NSW government has announced a new package designed to even the playing field for first time buyers and bring housing costs under control.

The new measures, effective July 1, include stamp duty exemption for first time buyers purchasing new or existing properties under $650,000. Buyers of homes under $800,000 will also get stamp duty discounts.

Those purchasing homes with small deposits will no longer have to pay 9 per cent stamp duty charges on lenders’ mortgage insurance.

Other measures are aimed at further restricting investor purchases. Investors will no longer be able to defer stamp duty payments on off-the-plan purchases for 12 months.

The same concession will become available for off-the-plan buyers who intend to live in the properties they are purchasing.

The stamp duty surcharge on foreign investors, meanwhile, will increase from 4 per cent to 8 percent.

NSW Premier Gladys Berejiklian also announced eligibility criteria for the existing $10,000 First Homeowners Grant would be restricted to those building new homes valued up to $750,000 or those purchasing new homes valued up to $600,000.

Interest Rate On Hold

Posted on April 6, 2016 at 2:03 AM Comments comments (304)

Interest Rate Update

Posted on December 2, 2015 at 9:52 PM Comments comments (348)
The Reserve Bank has left the cash rate on hold today at it's record low of 2.0% as was predicted by most economists.

RP Data released in November revealed that after three years of solid price growth, home values in Sydney are now falling. With a 1 per cent drop over the past three months, houses were hardest hit – falling 1.4 per cent, while units bucked the trend increasing 0.6 per cent. This overall decline is in line with auction clearance rates also dropping in November.

We are unsure what to expect at the next meeting, and given it is in February we expect a lot of discussion about its likely outcome between now and then.

On that note, I would like to take this opportunity to wish you a wonderful holiday season and look forward to staying in touch in the new year.


Is selling your property at Christmas a good idea?

Posted on November 26, 2015 at 9:36 PM Comments comments (142)
It’s only four weeks until Christmas which means you are about to get very busy. There’s decorations to hang, shopping to do, eating and drinking with friends to enjoy and holidays to plan. So if you’re contemplating selling your home at Christmas time, is it such a good idea?

Selling at Christmas has traditionally been seen as bad timing. Let’s face it, most people choose the Christmas break to go on holiday and relax.  An obvious consequence of this could be a reduction in the number of potential buyers looking at your home. Not only that but real estate agents generally use the Christmas and New Year period to take some time off themselves, so they might advise you against selling your property over this time to ensure they don’t miss out on a sale!  But times are changing.

Buyers now realise that if they want to secure their ideal home they need to beat the competition. So while many buyers shelve their property search during the festive season, the truly motivated ones are constantly searching. As a seller this is great news. Your pool of buyers are not tyre kickers, they’re keen to secure a property over the holidays so they can start the New Year afresh and are less likely to waste your time.

So what are the pros and cons of selling at Christmas? 
Pros:
With less competition during the holidays, the number of houses on the market decreases, reducing competition between sellers and increasing competition between buyers. As buyers bid to secure a home for themselves, they may end up offering far more than originally asked. People who seek properties during the holiday months are serious about purchasing and it is likely that you will make a quick sale so they can settle early in the New Year.  Let’s face it, spending week after week searching for properties can be exhausting!

Cons:
The buyer who is looking over the holidays may be suspicious of your house-selling motivations. They may think you are desperate, or that there must be something wrong with the property as it hasn’t sold yet.  They might assume you are in a situation where you need to sell your house quickly to relieve yourself of a financial debt or because you have already bought another home. If they believe that you are impatient to sell, buyers are more likely to make offers lower than the asking price with the result of either diminishing your profits or needlessly dragging out negotiations until you are satisfied.
However, with a good agent and clever marketing strategy you can actually capitalise on the time of year to achieve a price higher than expected.

Whether you are buying or selling over the holidays one thing is certain, there is a huge psychological benefit to getting the deal done by December 31. House selling and hunting is tough and knowing you can head into the New Year with a new home, or cash in the bank is an enormous motivation.

Off Plan Purchase

Posted on November 24, 2015 at 7:33 PM Comments comments (114)
NSW Parliament today approved amendments to the Conveyancing Act 1919, strengthening protections for buyers who purchase properties off the plan.
Minister for Innovation and Better Regulation Victor Dominello said the new laws are intended to prevent rogue developers from rescinding contracts using the sunset clause to make windfall profits.

“The NSW Government has listened to the community’s concerns and acted swiftly to provide home buyers with greater certainty,” he said.
“Any developers who are thinking of acting unethically should know that their behaviour will no longer be tolerated.”

Effective from 2 November 2015, developers must gain the consent of a purchaser before rescinding a contract using a sunset clause.
If consent is not given then the developer must apply to the Supreme Court to justify the proposed termination.

Some NSW consumers have reportedly had their contracts rescinded by a developer using the sunset clause, only for the land or apartment to be re-sold the same day for a higher price 639 people responded to the three week public consultation which closed on 14 October. Industry groups were also consulted.
The amendments passed with bipartisan support.

More information about the new law is at www.lpi.nsw.gov.au.

Interest Rate News

Posted on November 3, 2015 at 10:06 PM Comments comments (132)
The Reserve Bank has once again left interest rates on hold at the historic low of 2 per cent. However commentary in the meeting, suggested a rate cut could be on the cards in the near future.

Auction clearance rates in Sydney and Melbourne hit their lowest points this year and capital city property prices flat-lined over October. This drop off, coupled with some banks raising their interest rate, is casting shadow over consumer spending leading into Christmas.

It will certainly be an interesting couple of months to end 2015, and likely to be a very different playing field to what the year kicked off with,

Historic Cut to Interest Rate

Posted on February 4, 2015 at 12:30 AM Comments comments (107)
THE Reserve Bank has cut official interest rates to a new low in a decision that paves the way for the cheapest home loans in more than 40 years, a weaker Australian dollar and further increases in house prices.

Returning from a two-month summer break, the RBA board ended a mounting frenzy of speculation over whether interest rates should, or would, be cut, choosing to end a period of interest rate stability that had seen official rates at 2.5 per cent for the 17 months, since August 2013.

Economists still expect the bank to cut rates at least one more time this year.
“We hope lenders will pass on the full rate cuts and more to their variable rate home loan customers because there’s no excuse not to pass on the full cuts. Lenders have kept 0.45 percentage points on average of cash rate cuts from variable rate home loan customers since the cash rate began to fall in November 2011,” said Michelle Hutchison, an analyst at Finder.com.au

Few were expecting an interest-rate cut only a week ago, citing the RBA’s December statement that “a period of stability in interest rates” was the most likely course. But an article by veteran Herald Sun finance commentator Terry McCrann last Thursday — who has accurately predicted more than half of the RBA’s interest rate moves since the GFC — moved expectations dramatically in the direction of a rate cut.
 

Holiday Break

Posted on December 17, 2014 at 8:13 PM Comments comments (219)
Principal Acknowledgement 

It has been very busy year 2014, as a Principal of Affordable Plus Conveyancing i would like to thank all our clients for their trust and faith in our Conveyancing services and we promise more affordability on its way in 2015. 

** Our office will close from Friday 19 December 2014 and re-open on Monday 12 January 2015. Wish all happy and safe Holiday Season **. 



If you are interested in legal arguments this case law for you

Posted on December 17, 2014 at 7:14 PM Comments comments (466)

Rehayem Investments v Harfish [2014] NSWSC 1485

REAL PROPERTY - sale of land - whether contract for sale of land validly
terminated - whether notice of termination effective - where notice to
complete authorised by special condition of contract - where first defendant
failed to complete contract in accordance with notice to complete

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