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Finance Approved?

Congratulations! You are a step closer to owning your own home. Now that the difficult tasks of finding a home, and getting your finance approval have happened, you are definitely on the downhill run to the finish line, but you can't afford to sit back just yet, there are a few things you still need to address before you become a first home owner. You should normally have at least 14 days to prepare for the settlement (21-28 days are the most common times), so make sure you don't leave anything to the last minute.

Loan Documents

You will normally, around 5 business days after you're notified of your finance approval, receive a large amount of paperwork from the bank. REMEMBER! You are well within your right, if you find the paperwork a little daunting, to request a meeting with your finance broker to run through the contracts with you. It is very important you check through the documents and make sure you understand what you are signing. If you are having trouble understanding what is on the loan contracts, you would be well advised to seek independent legal advice, which unfortunately you will have to bear the costs of.  But most importantly, with this step, is getting the documents completed and returned, if the bank takes a week to get the documents to you, then you take a week to get them back, it won't leave the bank much time to ready themselves for a 21 day settlement, given the banks will normally take 2-5 business days to process the returned documents.

Your loan pack should consist of at least 2 copies of the mortgages (instrument that allows the bank to register their interest over the property) and loan contracts (outlays fees, charges, repayments and terms of the credit provided, as well as the amount), other forms that will be in there are settlement and disbursement authorities, these allow you to nominate where and how the loan is paid, and permission to withdraw funds, if you require the bank to draw on any additional funds, from a nominated account to assist in completing the settlement. There will also be a direct debit form in the loan pack, this will allow you to nominate an account where the loan can be paid from. Various other forms will be in the loan pack that will vary from lender to lender, but the above are the main forms. The bank should also request you show proof that you have the building insured and may specify an amount, they should also supply you with their lending terms and conditions as well.

*A quick point to be made about the loan contract or Letter of Offer- The fees and charges listed should be broken into at least 2 categories, Fees and Charges that are payable by you now, Fees and charges that may be payable by you over the life of the loan. The lender needs to list all the fees and charges that may be payable, by you, over the life of the loan. So don't panic if you see fees in there that don't relate specifically to what you're doing, they are in there because you may need to use that feature or service once the loan has been settled.       

Transfer of Land

Your settlement agent should have been advised of your finance approval by now, and they should be working on your transfer of land form. The transfer of land gets completed and signed by vendor (seller) and purchaser, acknowledging the land description and identifying the lot, volume, folio and plan/ diagram numbers. The form lists the outgoing and incoming owners, and is submitted to the relevant government department, along with the mortgages to effect the change of ownership.

The settlement agent should also have, or be close to providing you with a settlement statement. This will outline the purchase price and all estimated associated fees and charges, it also lists any deposits paid, and will show if there is any further funds required by you to effect the settlement. Should there be any further funding required by you, it is a good Idea to contact your settlement agent, to find out when and how they need the funds transferred, or cheques deposited by to ensure a hassle free settlement. The last thing you will want to do, is leave work and run all over town to get a bank cheque to the settlement agent, the morning settlement is due!

Insurance

You will also need to arrange insurance cover for the property you are buying, all lenders will require you show proof of insurance. The reason being that they want to make sure should the worst happen and the home is destroyed, that it can be replaced and both lender along with borrower are not left with an uninhabitable home. This should be very high on your list of priorities also! The bank will require you provide them with what is known as a 'Certificate of Currency', this is when people normally get thrown into a tail spin, wondering what exactly that is. Worded a little more sensibly, it is just a certificate showing you have current insurance on the building. The people you deal with for your insurance will know exactly what you are talking about, the mortgagee (Lender) will need to be noted on the certificate also as being an interested party. If you are buying a strata property, insurance works a little differently with these properties, you can discuss this with the real estate agent or have the agent put you in touch with the representative of the strata 'Body Corporate' to check up on the insurance held over the property. To find out what you need to know about insurance and get a quote click here.

There is also the issue of protecting your ability to pay the mortgage and live, should something happen and you are no longer able to work. To find out how to protect your income and your new home click here.

Pest and Building Inspections

If you have noted your offer subject to any type of inspection, you need to get these arranged now also, these are still conditions of the offer and the inspections outcome may cause you to pull out of the contract possibly. Plus if there is any problem that needs rectifying, you will want as much time as possible to have this sorted out, or re negotiate with the vendor (seller).

Final Inspections

It is recommended that around 5 days before settlement, that you ask to do a final inspection. This is a very important part of the process, should you miss something here, you will most likely have to put up with it! We have attached a final inspection checklist for you to have a look at, to access the document click here. Or to find out more about final inspections click here.

 
The 7 steps to buying your first home