UNO home loans
13th October 2022
5 Steps to purchasing the perfect home
Where do you start when purchasing a home? From budgeting to buying, here are a few ideas aimed at giving you a leg up on the property ladder.
Steps at a glance:
- Step 1: Budget
- Step 2: Get home loan pre-approval
- Step 3: Find a home
- Step 4: Bid with confidence
- Step 5: Celebrate and settle
Step 1: Budget
The commission real estate agents charge for their selling services varies between states as well as between areas, according to openagent.com.au, which estimates the lowest at about 1.6% and the highest around 4%. The average across the country seems to be around 2-2.5% of the home, meaning on the sale of a $1 million property, the agent’s fee will be $20,000 to $25,000. And while some agents include advertising and marketing costs in their commission, others don’t, so be sure to check.
How much money do you need for a house deposit?
There is no magic number when it comes to a deposit, however in Australia the majority of lenders require you to have saved 10% of the property’s value (a couple of lenders may only require 5%). This means if you’re looking to buy a house with a value of $800,000, you’ll need a deposit somewhere between $40,000 and $80,000.
You’ll also need to account for added costs such as solicitors’ fees and government charges on top of your deposit. And in many cases, stamp duty. Read UNO’s comprehensive guide to stamp duty here.
Step 2: Apply for a home loan / get pre-approval
Securing pre-approval for your expected maximum loan amount will help you negotiate the best purchase price when it comes time to buy. Applying for a home loan through unohomeloans.com.au goes a little something like this:
You: Submit information, tell us what you want, provide documents such as photo ID, payslips and bank statements.
UNO: We’ll have a look at your situation and show you some home loans options and interest rates that are right for you.
You: Choose the loan option you fancy the most.
UNO: We’ll then submit your application to the lender. The lender might ask for more information such as the contract of sale (if you’ve found your property). Once all docs have been checked on the lender’s end, you’re ready to go.
Step 3: Find a home
In Australia, there are multiple ways to find the perfect home. You can use real estate search engines such as realestate.com.au and domain.com.au to search for properties all around Australia, or check out commercial real estate agents’ websites and storefronts in the suburbs you’re looking to buy. Reasonably new websites such as Purplebricks, which charges sellers a low fixed fee rather than commission, and YouWish, which lets homebuyers search for off-market properties are entering the market all the time too. You can even drop a letter in the box of a house you want to buy and ask them if they’ll sell it to you. They probably won’t, but it’s worth a shot!
Buyers agents, or advocates, are real estate specialists who work one-on-one with buyers to find the best deal on a home or investment that suits their precise purposes. They charge a fee, but can help prospective buyers who might dislike dealing with real estate agents, or find themselves frustrated by researching underquoted properties and getting outbid at auctions.
Step 4: Bid with confidence
If you’re serious about making an offer on a property or bidding on it at auction, you’ll need to pay for what’s known in the biz as a “P&B”. Unfortunately it’s not a peanut butter sandwich, but a pest and building inspection. These tend to cost around $250, although sometimes they’re $300 or even $400. Sometimes the vendor or selling agents will pay for one to be done, and interested buyers pay for access to the report, which is available for a slightly reduced fee.
Step 5: Celebrate and settle
Once you’ve found the property you want to purchase and have negotiated a mutually agreeable price with the vendor/won at auction, UNO will instruct the lender to perform their valuation, and convert your pre-approval into a formal approval.
You’ll pay a 10% deposit from your savings (if necessary, for a fee, deposit bonds can be used in place of cash) and sign the Contract of Sale. This is referred to as exchanging contracts.
If you purchased real-estate via private treaty, there’s a cooling off period. In New South Wales, Queensland and the ACT you have five business days to back out of a signed contract. You may get out of the contract as long as you give a written notice. The cooling-off period starts as soon as you exchange and ends at 5pm on the fifth business day after exchange. You can read more at the office of fair trading in your state or territory.
There’s no cooling off period If you bought at auction, so make sure you have your signed bank cheque ready to go on the day of auction.
Once you’ve found your dream home, UNO then instructs the lender to prepare the mortgage and loan contracts, checks these documents and forwards them to you for signing. If this is your first mortgage, it’s a good idea to have your conveyancer or legal representative explain these documents in detail.
If you’ve got the green light from your team, sign the documents and return them to UNO or directly to the lender. UNO acts as a cat wrangler and ensures the funds are ready for settlement by coordinating between the incoming and outgoing lender (if there is one).
Hopefully everything runs smoothly and you’re ready to take possession of the property you’ve purchased on settlement day then pop the champagne! Live it up while you can, because then it’s back to reality when you commence making loan repayments within one month. This is referred to as “Settlement”.
