Buying an investment property continues to be one of Australia’s favourite ways to invest hard earned money. This is how the process of buying works.
Buying a property should be a fun and exciting experience and if you do your homework and learn how it all works, you will enjoy it even more knowing you are buying the right property for you and your family.
Most clients we talk with surf the net and go and visit open home inspections but at the end of the day they all say the same thing….we don’t really know what we are looking for and don’t even really understand how it works.
Luckily it is not that hard and once you understand the process, you will get better and better at it each time.
This can be as simple as listing all your assets, including incomes and work out your expenses.
Contact your mortgage broker and tell them you are looking at buying a property. They will ask you if you have found a property but you will need to let them know you are looking for pre-approval only so you can then look at suitable properties within your approved budget.
Provide the financial documents that the broker requires to get pre-approval for you.
These may include:
- Personal Identification
- Pay Slips or Income Statements
- Bank Statements
- P & L Statements
- Tax Returns
- Credit Card Statements
- Loan Statements
Once you have received your pre-approval you will be able to start to source the best property for your needs. If you are looking to become a homeowner or an investor, you will need to find a property that fits within your budget. At this stage we will start to go and look at suitable properties and work out the clients preferred property.
If you find the suitable property it is now time to put in an offer to purchase. If the property is new, this may be in the form of an Expression Of Interest. If the property is lived in, it will be in the form of the Sale Contract with clauses outlining the conditions of purchase at the offered price. If the developer or owner agrees to the price they will sign the sale contract.
You should also obtain advice regarding the contract, and particularly any rights or liabilities you have under the contract.
Complete the final finance application. The contract of sale will generally be subject to finance approved by a set date after signing. This will normally be 14 – 21 days after signing. A small deposit should be paid along with the signed contract and then generally the agreed deposit (most times 10%) will be due upon approval of the finance and the contract going unconditional. You should contact your lawyer and let them know you are purchasing the property for them to handle the conveyancing or finalising of the title and settlement. If you don’t have a lawyer, many law firms specialise in Conveyancing and they can be engaged to assist on your behalf.
On the set date that the property is agreed to settle, the lawyers who have been corresponding will contact you to come in and finalise the purchase. At this point, the lender has already finalised the payment for the property to the seller and you are now ready to go in and collect all the keys and whatever else is required for the purchase. The documents may also include the release of mortgage documents, and anything else required to ensure you obtain clear title to the property.
If everything has progressed well, hopefully this will be as uneventful as possible. Essentially at the settlement your solicitor (or your bank) will hand over the money to the seller in exchange for the transfer documents to the property.
You are now the proud owner of a new property.
After a few years and you have built up equity, we get a valuation done and then start at Step 1 again building a portfolio and setting up retirement.