Finalising a home purchase

We’ll explain the four major steps of the final purchasing process

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You’ve found a property you love, put in an offer, and the buyer has accepted. But what happens on settlement day? The purchasing process is actually quite straightforward when you know what’s involved.

Step 1. Exchange to settlement process

‘Exchange’ is the first big step in committing to buying a new home. It refers to when the buyer and seller each sign a copy of the contract of sale, then swap their copies over so that everyone has a signed contract. 
Neither you nor the seller are legally bound to go ahead with the sale until a written, signed contract is exchanged. This is an important moment. The time of exchange is also when you need to pay a deposit. 
Once contracts are exchanged, it usually takes six weeks until ‘settlement’. This is when the sale is finalised and you can move into your new home. Your mortgage broker will be busy at this stage, liaising with your lender to ensure your home loan is ready to go on settlement date. 

Step 2. Cooling off period

If you’ve purchased your first home through a private treaty — that is, you’ve made an offer to the owner and it’s been accepted — you may get a cooling-off period after the contract is exchanged.
During this period you can cancel the contract though there may be a penalty, which is usually around 0.25% of the purchase price. The number of days in a cooling off period varies from state to state, but your mortgage broker or conveyancer can explain what applies to your situation.

Buying at auction is different as there is usually no cooling off period. If you are the highest bidder when the hammer falls, you are generally obliged to go ahead with the purchase.

Step 3. Purchase price vs bank valuation

As part of the loan approval process, your lender will likely want to assess the value of the property you intend to purchase. You don’t have to do anything at this stage — your lender will organise their own bank valuation.
The lender might not disclose what the bank valuation came to — it could be different to the purchase price anyway because lenders often make conservative estimates. The main point of the valuation is that the bank wants to ensure that they aren’t lending you more than the property is worth. 

Step 4. Using a buyer’s agent

If you need help finding a property, using a buyer’s agent may help. They work on your behalf to find a home that meets your needs, they then negotiate with the seller to help get you a good price. 
A buyer’s agent could potentially save you time and money, but they do charge for their services — often a percentage of the property’s sale price. This can become a significant cost to factor into your buying budget. 

The purchase process takes you one step closer to when you are buying your first home on your own — your Aussie Broker will keep you up to date on how things are progressing. 

Before you start putting offers on homes, there are a few steps you need to take first. Your local Aussie Broker can help explain the steps of sorting out your finances, compare home loan options, then present you with options to find the one which suits your needs.

Speak to an Aussie Broker 

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