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Six Key Points to Remember When Buying a Home

Six Key Points to Remember When Buying a Home

17 June 2024

Buying a home is a significant financial and emotional undertaking with numerous considerations that can be easily overlooked. To help you navigate this process, here’s a list of the six key points you need to remember when buying a home.   We hope you find this list useful.   Pre-approval (Conditional Approval) Pre-approval means a […]

Buying a home is a significant financial and emotional undertaking with numerous considerations that can be easily overlooked. To help you navigate this process, here’s a list of the six key points you need to remember when buying a home.

 

We hope you find this list useful.

 

  1. Pre-approval (Conditional Approval)

Pre-approval means a lender agrees to a home loan in principal, but the buyer must provide more details when applying for an unconditional loan, which can still be declined. Pre-approval typically lasts for three months, and the final interest rate may change during this period, affecting the amount you can borrow.

 

  1. Credit Score

A credit score is a numerical figure that lenders use to assess a borrower’s ability to afford a home loan. It is calculated based on the total amount of money borrowed, the number of credit applications made, and the timeliness of loan repayments. Buyers can check their credit score before approaching a lender.

 

  1. Stamp Duty (Transfer Duty)

Stamp duty is a state tax payable on property purchases in Victoria. This upfront cost is due when a home loan contract becomes unconditional and is calculated based on the property’s value, typically ranging between 1.4% and 5.5% of the purchase price. First-home buyers may qualify for concessions or exemptions under certain conditions.

 

  1. Conveyancers

Conveyancers are professionals who specialise in real estate transactions. They prepare and lodge all necessary legal documents, including the sales contract and land transfer details. In Victoria, conveyancers must be licensed, and many also hold legal qualifications.

 

  1. Building and Pest Inspections

These inspections identify hidden structural, pest, and other issues in a home before the sales contract is signed. Depending on the findings, buyers may choose not to proceed with the purchase or negotiate a lower price to cover necessary repairs.

 

  1. Lenders Mortgage Insurance (LMI)

LMI is an additional fee paid when a buyer’s home loan deposit is less than 20% of the property’s value. This insurance protects the lender against potential default by the borrower. In Victoria, as elsewhere in Australia, LMI can be a significant cost, so it’s important to factor this into your budget if your deposit is less than 20%.

 

By keeping these key points in mind, buyers in Victoria can better navigate the home buying process and avoid common pitfalls.