Purchasing your first property is one of the largest financial decisions you will ever make. Whether you are buying your first home or an investment property, having an understanding of the process involved can help to relieve the stress of the situation.
Once you have your deposit and funds to complete the purchase you may want to think about applying for a pre-approval from your lender.
A pre-approval can save a lot of time and worry further down the track.
It is an indicative assurance from the lender that based on the information you have supplied, they would be willing to consider lending you money to purchase a property. Of course, this would be subject to credit checks and lender criteria.
The decision to purchase a property should be made after careful consideration. Do yourself a favour and do not get caught up in hype such as, “there’s been a lot of interest in the property”, “you had better act quick”, or “this property won’t last long”. There are always other properties around, and buying when anxious or panicky is not ideal.

When you have found the ideal property, what is the next step?
First, request a copy of the contract of sale from the agent and enlist the help of a qualified solicitor. The solicitor will read over the contract, explain the clauses, your rights and responsibilities, and order pest and building inspections. They will also advise you about the legal side of the contract and will act on your behalf throughout the purchase.
If your solicitor and you are both happy with the terms of the contract it is time to make an offer on the property. The agent will take your offer to the vendor (seller) and advise you if they have accepted your offer. Once your offer has been accepted by the vendor, you are one step closer to owning the property — but it is not yours yet.
The contract of sale will be completed with your details, your solicitor’s details and the agreed price. In some cases you will be asked to pay a holding deposit to show that you are a serious buyer. However, the vendor can still accept higher offers from other buyers at this point. If you have paid a deposit and the vendor accepts a higher offer your total deposit will be refunded.
Most contracts have a cooling off period. This time allows you to get your finances in place and do the relevant searches on the property. Cooling off periods vary across Australia — in New South Wales you will usually have five working days. Your solicitor can apply for an extension of the cooling off period if you need more time.
A key point to bear in mind is that auction purchases have no cooling off periods, so it is critical that if you are buying through auction you fully understand your borrowing capacity.
Next you will need to advise your lender that you have found a property. They will order a valuation to make sure that the purchase price is in line with the market, and that the property is acceptable for them to take as security over your loan.
At this stage you will need to provide updated paperwork and begin the assessment of your mortgage application. Once the valuation has been received and the lender has accepted the valuation report they will proceed with the assessment. If all lender conditions have been satisfied they will issue you with a formal approval.
Do not sign the contract until you have given the formal approval to your solicitor, who will check everything is in order and arrange for contracts to be exchanged.
From this point both parties have signed the contract and the purchase is now unconditional. Mortgage documents will be issued to you for signing and once returned to the lender they will then move to settlement of the loan.
A settlement date will then be arranged and will occur according to the contract conditions. The timing for settlement can be from 30 to 90 days after exchange of contract. This is when you will be required to make payment of the balance of the funds required for the sale to be finalised. This final figure will include adjustments for council rates and water.
You should arrange for a final inspection with the agent to ensure that the property is in the same condition that you saw it, and that all inclusions as per the contract have been left by the vendor.
Your lender will be noted on your title as an interested party as they are holding the property as security for the loan. They will stay on the title until you repay the loan amount in full and discharge the mortgage.
The process may put you outside your comfort zone; however, if you use qualified professionals to help you through the process you will enjoy the experience and hopefully will want to continue growing your property portfolio.Knowing what and why you are doing things makes for happy buying. ❐