Here’s a list of ten important things you need to know when buying a house
- Know what your requirements are. If you require at least 4 bedrooms, don’t waste your time looking at shoe-box apartments or 2 bedroom townhouses.
- Have your financing options ready. There is nothing worse finding out you can’t raise a mortgage to complete the purchase of your chosen house. Most banks will conditionally pre-approve your home loan. It’s highly recommended you talk to your bank first.
- When you have found a house you are interested in, request a copy of the LIM report. The LIM report will provide you information including plumbing, drainage, resource planning consents and permits.
- If you require a good school zone, check if the house qualifies for the school zone.
- Check if the property is a leasehold interest. In most cases, this is undesirable. You want an estate in fee simple or freehold title property. Unit Titled property may be suitable for some owners.
- Ask whether the building has any weathertightness issues. If possible, ask for a building report. Generally, be careful when purchasing homes with plaster cladding.
- If you are buying a unit-title property, ask for the vendor for the pre-contract disclosure. Vendors must provide this to you before you sign a sales and purchase agreement. If you decide to purchase the unit titled property, the vendor is required to provide a pre-settlement disclosure statement to buyers once a sale and purchase agreement has been entered into and before it has settled. It must be provided by the end of the 5th working day before the settlement date.
- Seek legal advice as early as possible. Lawyers will guide you through the loan documents and give advice to you regarding whether to buy the house in a trust or under your own name. Your lawyer will explain to you the contents of the LIM report as well as any additional disclosures supplied to you if you are buying a unit titled property. Lawyers will give advice on your obligations if you choose to buy at an auction.
- When negotiating the contract, you need to agree on the settlement and possession date, price and terms. In most cases, the agent will use an ADLS/REINZ Agreement for Sale and Purchase contract. This type of contract is the standard and most common form of contract. Take note of any special conditions that the vendor adds into the contract. Check if the price includes GST. Some CBD apartments are sold as plus GST (READ: this means the price does not include GST and GST will be added onto the offer price) Especially if you are purchasing at an auction, be sure the read the terms before bidding. If you win an auction, the contract becomes unconditional.
- Prior to settlement, you need to do a final inspection and arrange home and contents insurance. Make sure your bank has arranged your mortgage because if you can’t settle on the settlement date, you will have to pay penalty interest.
Bonus: You usually can’t change an agreement after you have signed it. So remember to do your due diligence and consult your lawyer first before signing an unconditional contract.