Buying your first property is undoubtedly terrifying – but this article should help those who need a little nudge before jumping off the diving board.
1. Get your finance sorted early
This might sound obvious, but the whole process will be easier if you:
- have a conditional approval for a loan (“pre-approval”) prior to your submission of an offer;
- advise your bank of your offer straight away; and
- if you are relying on finance, ensure that your offer is conditional upon finance approval.
While there is now a right to extend Settlement by up to 5 business days included within the standard form REIQ Contract, that time vanishes very quickly if you are still desperately looking for an acceptable finance solution at any time close to Settlement.
2. Dates are critical
Generally speaking, non-compliance with obligations by due dates under a property contract is a big no-no. If you’re familiar with QUT’s 0% policy (if an assignment is one minute late, you get zero marks), then you are familiar with the amount of leeway that a typical property contract contains.
Let’s imagine you have a standard Finance or Building & Pest Condition on your Contract, and it’s due on 30 June 2022. If, by 5:00pm on 30 June 2022, neither you or your solicitor have satisfied or waived the relevant condition, then the Seller can terminate the Contract at 5:01pm and rip the property of your dreams out from under your nose.
3. Unconditional status does not mean searches are useless
While searches may seem like a waste of money, especially if your Contract is unconditional, some can provide termination or compensation rights all the way up to the settlement date. This includes the Department of Transport and Main Roads search, which checks for any intention of that department to resume any part of the property. Special Water Meter Reads give a purchaser the right to adjust water usage based on what the average daily usage until the Special Water Meter Read date – without this, the Buyer is stuck paying for the Seller’s water usage – and no doubt the back-yard is as lush as the Garden of Eden.
Your solicitors are likely to have a good idea as to what searches should be done to balance risk and financial cost. Ask them!
4. Government schemes have stringent requirements
Many of the schemes for first home buyers have particular requirements that must be strictly followed in order for you to be, and remain eligible for the benefits that they offer. This is particularly important if you are planning on claiming the first home duty concession. As tempting as it is, you cannot rent out the Property within a year of you moving in without returning at least a proportion of the benefit bestowed by the concession.
5. Insurance is required earlier than you might think
Under the standard REIQ contract, the property is at the risk of the buyer from 5:00pm on the first business day after the Contract Date. This means that you should really have insurance in place from this period onwards. Some lenders will even require that you have insurance over the property before they provide you with the funds required for the purchase.
If you don’t organise insurance, damage that occurs despite the Seller using the property reasonably could be a ‘you problem’ – not a nice surprise on the Settlement Date.
6. Run a trained eye over the Contract
To ensure you haven’t been caught up in the excitement, you should always have your offers checked by a qualified legal professional. This can ensure that no sneaky clauses have been added and further, that nothing in the contract is unusual or leads to exclusions of things that you might expect to be included.
This step can prove invaluable, and some solicitors (us included) can also provide you with additional details about the property. For example, information about any character or flood overlays, easements or vegetation protections (to name but a few!) will typically be provided to you along with our pre-contractual review. This information can help you make an informed decision when looking to submit an offer.
We once reviewed a contract that contained a clause about the right to sneak items down the chimney of a property after Settlement! They called it a “Santa” clause (sorry).
7. Find your ID documents
When you apply for your finance, you will likely be required to verify your identity. With your solicitors you will absolutely need your ID documents – “100 points worth”, with the most common documents being a passport and driver’s licence.
If you don’t have a passport, you need to provide us with your driver’s licence (or other government-issued photo ID) and your full birth/citizenship/descent certificate and a Medicare/Centrelink/Department of Veteran’s Affairs card.
If you don’t have the above documents, it can cause a real issue that could potentially result in your solicitors not being able to effect settlement.
If this article has sold you on the usefulness and approachability of our dream team of property professionals, please get in contact on (07) 3226 3911 or email firstname.lastname@example.org.
Buying your first home? Think Property. Think Nicholsons.