Know the cooling-off period
After you've signed the contract to purchase your property, you may have several days leeway before you are locked into the purchase. This is known as the 'cooling-off period'. The laws vary according to state or territory, so you should seek a solicitor's advice.
Here are some key points to bear in mind:
- Get legal advice as soon as you decide to cancel the contract and before you notify the estate agent or seller.
- Cooling-off periods are not applicable to properties sold at auction, commercial properties or farms.
- If you decide to rescind the contract, you must formally notify the agent in writing, and within a set number of "clear business days" after you (the buyer) have signed the contract.
For more information about cooling off periods and to better understand your rights as a buyer visit your relevant Government website.
Do you need insurance?
There are three main types of insurance you'll come across when buying your first home. Here is a brief overview:
1. Lender's Mortgage Insurance
LMI is a type of insurance that most lenders require unless you can put down a deposit of 20% or more. It varies according to the size of the loan, and protects the lender from home owners defaulting on their payments. It is usually charged as a one off premium and calculated on a sliding scale.
2. Mortgage Protection Insurance
MPI is a type of insurance you take out to cover your home loan. It's not mandatory, but it's a very good idea to have it. It takes care of some or all your mortgage payments if you get injured, become too ill to work, or even ie. Costs will vary according to the extent of the cover you get.
3. Home and Contents Insurance
This insurance covers your new home and the belongings you keep inside it. It covers your property from physical damage, such as fire or flood, or loss caused by burglary. Lenders will require your property to be protected, because they have a vested interest in it.
What is 'settlement'?
There are generally two types of settlement that happen with most property purchases:
- Settlement of the property is when the balance of the purchase price is paid to the seller. The buyer receives the keys and becomes the legal owner of the property.
- Settlement of a loan coincides with settlement of the property. It's when the lender transfers the borrowed funds to the seller or the seller's mortgage holder.
The majority of people hire a conveyancer to handle the transfer of the property. Once the settlement is complete, you will need to transfer the name of the property from the vendor to the yourself (the buyer). This is called the Registration of Titles, and incurs a separate fee. Then the home is officially yours.
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