on
16 March 1999 at 2230L (GMT+11)
General Considerations
Finance
The first step is to determine just how much you can afford to pay for your home. If you will be borrowing funds, do see your bank or lending institution to determine whether any necessary qualifications or limitations will affect your borrowing ability. Make sure you know what loan application fees apply and how much any mortgage insurance will cost (if applicable).
In any contract for the purchase of your new home other than at auction, it is important to ensure that the Purchaser's Finance details are completed, preferably allowing not less than 14 days for approval, which approval should be obtained in writing from the lender.
Stamp Duty in Victoria and in most other States in Australia, is a significant cost and varies with the purchase price. A $100,000 property will attract stamp duty of $2,200 and the stamp duty on a $200,000 property is $8,200.
Choosing Your Home
Inspections can be fun and being able to imagine how the home will look when you have got it decorated just how you like it is a valuable ability. Apart from the number of rooms and obvious features there are other questions:
- How many and where are the power points?
- Is the roof and downpiping in good order?
- Do the stumps or weatherboards need replacing?
- Are there any damp spots?
- Are all the window frames in good order?
- Have alterations or additions got a council permit?
- Is any swimming pool fenced?
There are so many matters to keep in mind you should give consideration to using the Home Renovation Service of the Ministry of Housing and Construction, the RAIA Archicentre Pty Ltd or Building Surveying Services, each of whom will provide a comprehensive report for an inspection fee of between $250.00 and &$36300.00. You may seek the inclusion of a special condition in the contract making the sale conditional on the receipt of a satisfactory report within (say) 10 days.
Auctions
With your finance determined, if the property you have chosen is to be auctioned, you need to attend other auctions and decide what tactics you will adopt or whether you wish your solicitor to bid on your behalf. Without signalling your interest to the agent, you may seek to have your solicitor inspect the Contract of Sale and the Vendor's Section 32 Statement.
Before Signing A Contract
- Inspect the property carefully
- Check for the existence of building guarantees and permits
- Determine your budget and arrange finance
- Decide if you are going to be the sole proprietor or whether you are buying with another person as joint tenant or tenant-in-common or for a nominee
- If you think you may wish to nominate another party as a joint purchaser with you or a corporate entity add the words "and/or nominee"after your name on the contract. You will need to obtain a written appointment from the nominee, dated prior to the day of sale.
- Examine the Vendor's Statement
- Check for restrictions as to use
- Search the title and check that the particulars refer to the property inspected and that boundaries or fence lines are in the correct position
- Check for registered and unregistered easements and covenants
- Check the list of chattels (removeables) and fixtures. If in doubt have a description written in and initialled by the Vendor/s.
- Check all the terms and conditions of the contract and make you understand what they mean
- If you are not an Australian or New Zealand citizen, the Contract must be conditional upon the approval of the Foreign Investment Review Board
- Seek legal advice
Insurance
As soon as you have signed a Contract and paid the deposit, contact your insurer and request a cover-note be issued to protect your interest in the property. Ask for and write down the cover note number.
Your lender may require you to produce a Certificate of Currency of Insurance noting the lenders correct legal name as an interested party and, if so, you should request your insured to privde such a certificate as soon as possible so that settlement is not delayed.
If you are borrowing a significant sum to finance the purchase or buying together with your partner, it may be prudent to consider a "term" life insurance and an incapacity insurance. See Incapacity, Wills, Death & Inheritance.
Cooling Off
With some other exceptions, provided the contract has not been entered into within 3 days of a publicly advertised auction and the price is less than $250,000, you may end the contract within 3 clear business days of signing it if you change your mind.
What happens next?
You should receive a copy of the Contract and Vendor's Section 32 Statement originally signed by the Vendor/s. If you do not, demand such a copy from the selling agent and take these papers to your solicitor without delay.
In every conveyancing matter, your solicitor will:
- check whether you will hold the property as sole, joint proprietor or tenant-in-common as may be appropriate
- arrange for a title search if one has not already been obtained,
- lodge a caveat if you require it (advisable),
- prepare the transfer of land for your signature,
- provide copy documents to your lender,
- make further enquiries about the property,
- obtain certificates from all the relevant statutory authorities and government departments,
- report the results of these searches to you,
- where applicable receive the mortgage documents and obtain your signature/s,
- calculate adjustments of rates,
- remind you to arrange for a final inspection,
- arrange for the representatives of all parties to attend settlement,
- calculate amounts for the provision of necessary bank cheques
- notify the rating and taxing authorities of your purchase.
- report to you
and where there is no lender:
- s/he will collect the security documents,
- pay stamp duty,
- lodge the transfer for registration
- check the duplicate Certificate of Title when it issues
- provide you with a copy
- store the duplicate Certificate of Title for you
Your solicitor will also discuss with you the impact that your purchase may have on your Will, make any necessary changes and keep all documents in safe custody on your behalf.
Questions
You should feel free to ask your solicitor about any matter that is concerning you or which you do not understand. Buying a home is a major investment about which you must feel entirely comfortable. Owning you own home will give you a great feeling of pride and security and I wish you every success in your search.
BUYING OFF THE PLAN
Price
Check with an/other local agent/s as to how much the refurbished property may bring in the current market and see how this compares with the price being asked by the seller.
Refurbishment Specifications
The quality of fittings is important and if a unit is already refurbished for inspection by potential buyers, make sure the fittings are acceptable to you and that the Contract has a warranty that fittings of the same or equivalent quality will be provided at the expense of the seller.
Insurance
The Contract should provide that the seller will maintain a current insurance cover over the property and all the fittings and allow you to end the contract if the property is substantially damaged prior to settlement.
If you are borrowing a significant sum to finance the purchase or buying together with your partner, it may be prudent to also consider "term" life insurance and an incapacity insurance. See Incapacity, Wills, Death & Inheritance
Body Corporate and Outgoings
Ideally, there will be statement of Body Corporate fees chargeable to the property being purchased, and/or a warranty that such fees will not exceed certain sum for at least the first year of occupation. Some buyers report having experienced substantial increases in such fees and maintenance sinking funds.
Rental Income Guarantees
If you are considering an investment purchase, be wary of rental income guarantees. Check the local market carefully.
Finance
If you will be borrowing funds, before signing a contract that is not conditional on your obtaining the loan, do see your bank or lending institution to determine whether the loan will be available even though the settlement of the purchase may be many months away.
Deposit
Often the seller has the right to invest your deposit in an interest bearing account to the benefit of the seller.
Caveat
Usually you will not be able to lodge a caveat on title to protect your interest.
Stamp Duty
There is a stamp duty concession for the value of a refurbishment to an existing building and significant stamp duty savings may be available. There must be a new subdivision, the seller must be the first registered proprietor, the transfer to a buyer must be the first after registration of the plan of subdivision, no other contract for refurbishment can be entered into and various statutory declarations must be provided which the contract should specify that the seller undertakes to provide at the seller's cost.
Date of Settlement
The Victorian Subdivision Act requires the subdivision to be registered within 18 months, unless a different time interval is specified in the Contract. Check the time allowed and discuss this with your lender.
Costs
Costs are likely to be higher than usual because of the protracted nature of these purchases (sometimes settlement will not take place until some eighteen or more months have elapsed). Numerous letters and telephone contacts will probably be necessary and additional title and other searches may be required, all of which lead to increased costs.
Utilities
The Contract may or may not specify that appropriate wiring will be installed for telephones and television. You have the task of arranging and perhaps paying for the connection of all the utilities (gas, electricity and telephone).
Questions
You should feel free to ask your solicitor about any matter that is concerning you or which you do not understand. Buying a home is a major investment about which you must feel entirely comfortable. Owning you own home will give you a great feeling of pride and security and I wish you every success in your search.
Further information maybe obtained from the Land Channel, Victoria site.