Legal Home Loans

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What to do after receiving your home loan pre-approval

You’ve got your pre-approval from the bank and know your borrowing capacity. Great, what’s next? Read below for our guide on the next steps you should take:

  1. Start looking at properties.
    • Do some research and get to know the market.
      • Look at comparable sales in the suburbs you’re considering. This will give you a better idea of what is out there for your price point and how properties are valued in the area. This will especially assist with making a fair offer.
    • Sign up for real estate alerts.
      • This way you can be notified of new listings for the areas you’re interested in. Website such as https://www.realestate.com.au and https://www.domain.com.au are great to search for listings. You should also contact real estate agents directly and let them know what you’re looking for. They can usually provide you with a shortlist of properties they have available that fit your criteria.
    • Attend auctions and inspections.
      • This is a beneficial way to identify what to look out for. Attending inspections and auctions will help you understand how competitive the market is in the area and how other buyers are behaving.
    • Get property reports.
      • Property reports will provide you with information on the sales history and value of a given property. This may be at a cost but it’s worthwhile finding out. A good broker can also organise complimentary property reports for you. To request a report, click here.
  1. Be aware of what your lender requires.
    • Depending on the lender and type of loan you’re taking out, certain requirements must be met by the property to be eligible for the loan. A pre-approval is subject to the lender accepting the property, so it’s best to check the criteria have been met before making any offers. Examples of the criteria can include the property size, location, or zoning. Speak to your broker or lender to find out what criteria your property has to meet.
  1. Find a conveyancer.
    • We recommend you engage with a conveyancer (or settlement agent for WA) before making an offer to assist with the legal documents for purchasing the property. A good conveyancer will advise you throughout the process and ensure you’re protected. Introducing your broker to the conveyancer will also assist with a seamless settlement process.

  2. Making an offer.
    • Once you’ve found a property you would like to purchase, we suggest you discuss this with your conveyancer for their advice on your offer. It is recommended you discuss which conditions should be included, such as:
      • 2 weeks cooling-off period or finance clause. We highly recommend this as it allows time for the lender to arrange a valuation and final approval. If the vendor or agent doesn’t agree to this clause, there may be some risk involved with purchasing the property. If you can’t get a cooling-off period, you should talk to your conveyancer and broker to assess the risks involved before proceeding.
      • Subject to a pest and building inspection that’s acceptable to the purchaser – this is to avoid committing to a property that may have undisclosed issues, costing you more down the track.
      • Subject to a strata report that’s acceptable to the purchaser (applicable to strata title properties) – this is to avoid committing to the property if there are outstanding disputes and debts which may also increase your strata costs.
  1. Get inspections and strata reports done.
    • Since this will be one of the largest purchases you make, it is well worth checking organising the following reports to avoid any unexpected costs or grief later.
    • Pest and building inspections.
      • A pest and building inspection will provide you with a report on the current condition of the property and will highlight if there are any structural problems or pest infestations. Identifying these early on will prevent these issues from worsening and prepare you for any extra costs.
    • Strata report.
      • As mentioned above, this is useful to check if there are any disputes or debts and if it is managed well. In many cases, buyers may skip this step and end up with an unpleasant surprise. It is best to enquire whether the vendor has provided a strata report along with the contract of sale. Otherwise, the agent usually has recommended providers to order the report from or your lawyer can search for you.
  1. Buying at auction.
    • Buying at auction involves committing to buy before having formal approval from your chosen lender. As well as this, you will usually need to sign a 66w which waives the cooling-off period. Due to this, purchasing at an auction can be riskier. If you do choose to bid at an auction, it is recommended you order your inspections beforehand so you are aware of the property’s condition. You should also talk to your broker and conveyancer prior to the auction to assess your risk.
  1. After your offer has been accepted or you’ve won the auction.
    • You will be required to pay a deposit once your offer is accepted or once you’ve won the auction. This will be your guarantee to the vendor that you will follow through with the purchase. Usually, this is 5% or 10% but can vary depending on the state. These funds are held by the agents or solicitor’s trust until settlement. If you are borrowing 100% of property value, you can organise a deposit bond. If you are going to an auction you should request this from your conveyancer prior to the day.
    • You will need to have your formal approval from the lender organised to finalise your home loan. This will require you to provide your lender or broker with documents including the signed contract of sale and any other additional documents the lender requested as a condition of your preapproval.

If you have any questions along the process of purchasing your property make sure you contact your mortgage broker and conveyancer for advice. 

Happy house hunting!

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