Buying a property is one of the biggest financial steps that you will take as a first home buyer, therefore, it is critical for you to understand your rights as a buyer and just how the home buying process works. Unfortunately, the home buying process isn’t transparent across the country as each state has their own rules & processes when it comes to buying your first home.
We start our ‘Guide to buying your first home’ series with the Sunshine State of Queensland. Below you will learn more information on how the buying process works in Queensland.
Important: The below information assumes you have got a home loan pre-approval and have done your research and found the property you are looking to purchase.This article is general in nature and should not be relied upon. We recommend you seek your own advice or use the services of the relevant professionals. Speak to an FHBA Coach for details.
Before signing the contract
1. When you have expressed your interest in purchasing a property or your verbal offer has been accepted, the real estate agent or the seller’s legal representative (conveyancer/settlement agent/solicitor) or legal rep will prepare a contract of sale or offer and acceptance document for you to sign. It is important to ensure you have your own legal representation before signing the contract.
Important Tip: It is wise not use the legal representative recommended by the real estate agent, as they have the seller’s interests in mind. It is always best to source your own legal rep, or talk to our preferred solicitors – Lawlab, who have already helped many first home buyers
2. Once your legal rep has received the draft contract, they will review it, guide you through the terms of the contract and advise you on any special conditions. If necessary, they can also add special conditions to the contract, e.g. a delayed settlement date or a lower initial deposit amount.
Important Tip: If you want the carpets cleaned before you move in or if you want to keep the blinds on the property, it is important you get these terms included in the contract you will be signing.
3. You will need to ensure you are comfortable with the important dates in the contract:
- Building & Pest Inspection Date – usually 7 days: You will need to make sure you have completed any checks by this time.
- Finance Approval Date – usually 14 or 21 days: You will need to make sure you have unconditional home loan approval by this time
- Settlement Date – usually 30 days from the contract date: The date you can officially move into your first home, make sure you are ready to do so by this date!
Important Tip: If you already have a home loan approval, in most cases you will be able to get unconditional approval within 14 days. Therefore, it is important for you to get a home loan pre-approval prior to searching, allowing you to meet the conditions for the ‘unconditional loan approval’
At the point of signing the contract
4. When you are signing the contract it is important to ensure you have the stated deposit ready, because once the seller signs the contract you will be required to pay the deposit, as the contract will be officially binding. The deposit is negotiable and is usually an amount up to 10% of the purchase price. You may be able to negotiate paying a lower initial deposit when you sign the contract and the balance at a later date (e.g. once any cooling off period expires or when finance is approved).
Important Tip: It is a good idea to have a bank cheque drawn out to the name provided by your conveyancer when signing the contract – the legal rep won’t bank the cheque until you have confirmed you are ready to exchange the contract.
5. In Queensland, the property will be at your risk from 5pm on the first business day after the contract date, so it is crucial that you take out property building insurance immediately.
Important Tip: Speak to an FHBA Coach to get an Insurance quote that ensures you are covered in case something goes wrong with the property.
After signing the contract
6. If your contract is subject to any conditions, your legal rep will need to give notice on your behalf to the seller’s legal rep, advising them whether or not the conditions are satisfied (e.g. if you have obtained finance approval).
Important Tip: It is wise to get the building & pest inspection and the unconditional loan approval as soon as possible after the contract is signed. This will allow you to save time if you don’t end up proceeding with the purchase and have to find another property.
7. The standard settlement period is 30 days from the contract date, but you can negotiate a shorter or longer period if required, even after the contract is signed, through a request made to your legal rep. Keep in mind that your lender may take at least 2 to 3 weeks to confirm formal approval, issue loan documents and be in a position to settle.
Important Tip: Once the settlement date is confirmed, make sure you have given enough notice to your current landlord (if you are renting) to ensure you don’t have to pay rent and your mortgage at the same time.
Getting ready for settlement
8. Transfer (stamp) duty is payable on the purchase of the property, where the purchase price exceeds $505,000 for the first home purchase of an established property. If any concessions apply to you then your legal rep will prepare the declarations for you to sign and return. They will advise you when and how stamp duty will need to pay (which may be required before or at settlement depending on the settlement date and transaction type).
Important Tip: It is a good idea to look at the current government incentives that are available in the state of QLD before starting your first home buying journey.
9. Prior to settlement, your lender will also send you the loan offer documents for you to review and sign. If a guarantor is guaranteeing the loan then they may need to obtain independent legal and financial advice before the lender can be ready for settlement. Once the documents have been received and certified by the lender, they will be in a position to advise your solicitor what funds they will be contributing the purchase, allowing your legal rep to advise if you have any remaining deposit amount to contribute to the purchase.
Important Tip: It is a good idea to get these documents signed and send back to the lender as early as possible to ensure you still have enough in case they need to be redone or re-signed. It is why we suggest you use a broker, who can guide you through this process.
10. You should contact the real estate agent to arrange a final inspection of the property on the day before or day of settlement. This gives you an opportunity to make sure that the property is in the same condition as at the contract date and that any items that were in the contract are left on the premises. If there are any discrepancies, you should contact your legal rep immediately as the other party may be in breach of the contract.
Important Tip: Take the ‘contract of sale’ with you to ensure you remember all the special conditions have been met.
The big day – Settlement Day!
11. On the morning of the settlement day, you should check in with your legal rep to ensure that your funds (if applicable) have been received and if the settlement will take place as planned. There is usually no need for you to attend settlement as your legal rep will attend settlement on your behalf. Once settlement has occurred your legal rep will usually contact you immediately to advise that your purchase has settled! You can then collect any keys from the real estate agent.
Important Tip: Our final tip is that you should speak to an expert before starting the process of buying your first home as there are many steps in the process and an expert can ensure everything is done smoothly.
If you want to start your first home buying journey today or if you would like a complimentary chat with a first home buyer expert, please complete the form below:
First Home Buyers Australia