So you’ve done all the prep – you’ve eaten baked beans and noodles to save for a deposit, you’ve worked out what you can borrow, how much you can repay, you’ve worked out where and what kind of house you want and boom! there it is… the dream house… or, at least it’s your dream first house. You’re ready to buy it, so what happens next?
Make an offer
An offer is a formal, written agreement that is designed to be legally binding on you and the seller. It’s normal to make an offer with conditions on it – you might make your offer to purchase conditional on the house passing a structural assessment, on your bank approving the finance, on a termite inspection. If the conditions aren’t met, you can generally walk away or amend the offer.
Once you’ve made an offer, you hope the seller accepts it. Sometimes there will be some negotiation on price or conditions before a seller is willing to accept, but once they do, the offer becomes legally binding. From here the conditions are worked out – the termite inspection will happen, the structural assessment can be carried out and your finance approved.
So you’ve made an offer and it’s been accepted (woohoo!!) but when does the house actually become yours? The house becomes yours on the day you pay for it – this transaction is called settlement. When the offer is made and accepted there will usually be a settlement clause in there that determines when settlement takes place. It can be very soon, or a few months away, depending on what you agree to when you make the offer. Sometimes you’re buying a house from someone who is moving into their new home in four months time so they’ll want a four month settlement. Sometimes the house is already vacant and they want a three week settlement. It just depends.
When your house settles, your home loan and mortgage will be established and that will have some fees with it (around $500). You’ll also have an awful expense called stamp duty (which gets partially waived if you qualify for the first home owner’s grant). Stamp duty varies significantly with property value so it’s best to use a calculator to work out what it will cost you. It’s also worth thinking about costs like removalists, time off work to move house, storage costs if you can’t move straight away and the cost of any immediate upgrades that need doing (I know, air-con sounded so optional when you were house-hunting in spring, but summer begs to differ).