Buying a home
Explaining mortgage and conveyancing documents
Say you’ve found the perfect home. It’s got the right number of rooms, a backyard big enough for a Saint Bernard, it’s equally close to shops and schools… great! What are you waiting for? Make an offer!
But now comes the paperwork.
The amount of forms and filing involved with purchasing property can be intimidating, especially if it’s your first time. But it’s vital to know what’s required, as a seemingly minor oversight can cause major headaches.
Before considering making an offer on a home, you’ll probably want to engage the services of a conveyancer (or conveyancing solicitor). A conveyancer will make sure that both you and the vendor are complying with your legal obligations, and that your rights are protected. Their job is to dot every i and cross every t; they’ll help you navigate the paperwork and keep you from getting lost in the lingo.
What should I expect?
There are several documents that you (and/or your trusted conveyancer) will have to read at some point in the process, and knowing what to expect can make it easier to wade through them without getting bogged down in the detail.
Please note that this info is intended as a guide only, and there may be other requirements depending on your circumstances.
This is a contract between you and your lender that will spell out the details of your home loan. These details will probably include things like:
- the amount you’re borrowing,
- whether the loan offers a fixed or variable interest rate,
- the expected loan period,
- any associated fees and charges, and
- other features such as a redraw or offset facility.
It’s important that this contract is finalised before you pull the trigger on your purchase; committing to buying a house before you can actually access the funds could land you in a very tricky situation.
Certificate of title
This is a document that specifies the owner of the property. This certificate should be provided by the seller and reviewed by you, or your conveyancer, before a contract is signed.
It’ll also mention any limitations or special conditions on a property, such as:
- caveats, which are an official notice that a third party has an interest in the property;
- easements, which grant another party the legal right to use the property (for example, a power company may have the right to access part of your property to maintain cables);
- existing mortgages on the property; and
- heritage overlays.
Conditions like these may restrict what can be done with your land. For example, if there is an easement over part of your backyard to allow workers to inspect and maintain pipes, you may not be able to build anything which impedes their access. So, your plans for an in-ground swimming pool or your dream entertaining area might be flushed down the easily-accessible drain.
A vendor’s statement (often referred to as a section 32) is a document that provides information about a property that’s relevant to its sale. This information can include a lot of detail and may vary depending on the property, but some things you can expect are:
- the Certificate of Title;
- information on zoning, e.g. residential vs commercial;
- information on building permits, if significant works have been completed on the house recently (If the house has, say, a new extension but there’s no permit relating to it, that could be a red flag);
- lease agreements, if the property has recently been rented out; and
- outgoing costs, such as rates.
The vendor’s statement provides a chance for you to learn as much as you can about the property’s circumstances and history. It should be signed and supplied by the vendor and thoroughly reviewed before any contracts are signed—if you wait until after a contract is signed to ask about zoning and it turns out you can’t complete your planned subdivision, you might be totally out of luck.
It’s important to remember that you don’t immediately take possession of your new property once a contract is signed. There’ll be some time between the contract signing and the handover of keys (which occurs on the settlement date), giving you plenty of time to sort out moving arrangements, switch utilities over, and argue about who gets the bigger bedroom.
The vendor will need to provide you with a document outlining the details of your settlement, describing where and how your funds have been distributed. Details in this settlement statement can include:
- purchase price,
- deposit amount,
- rates estimate,
- government fees, and
- stamp duty.
You may receive an initial settlement statement prior to signing your contract, then a final statement after the contract has been signed and the settlement date is official. Then you can start counting the days until the big move!
Once settlement is completed and the property is officially yours, a document transferring ownership of the land will be lodged with the relevant office in your state or territory. This document is an official record of who owns a given piece of land, and will contain detail such as the purchase date and price. If the property is to be owned by two or more people, this document will specify the nature of their arrangement.
This document will be lodged by the seller, but it’s a good idea for you (or your representative) to check it and ensure that the details are correct.
Contract of sale
This one may be the most important, as the property is officially sold—with a big red sticker on the sign and everything—once you’ve signed the contract. The contract will include details such as:
- property details, like the address;
- names of the vendor and buyer;
- details of relevant agents and conveyancers;
- settlement date;
- cooling off period, if one applies;
- property price, deposit paid and outstanding balance; and
- special conditions, such as the sale being subject to finance, or subject to a building inspection.
The moment of signing can be nerve-wracking, but it can also be very exciting. You should ensure that you’ve read everything and that you understand it, and that you’re adhering to any special conditions. For example, in Queensland, building and pest inspections are organised and paid for by the buyer with no intervention from the realtor or owner of the property. This means the onus is on the buyer (aka you) to organise and be satisfied with the property’s building and pest inspections or pull out of the contract if you are not. Different legislation applies in different states, so be sure to check the rules where you are.
But you should also make sure that you take time to enjoy the moment. You found the right house, you made a successful offer, and now it’s yours. That’s cause for celebration.
You should never feel like you’re being rushed into signing something that you don’t fully understand or agree with. Take the time to read things thoroughly, and don’t be afraid to ask questions. Your conveyancer is a great source of information, and your lender or mortgage broker may have their own advice. Friends and family who have purchased property before can also be a valuable resource. They’ve been there too, they know how stressful it can be.
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement (PDS) making any decision regarding the product. Contact us for a copy.