Reviewing a contract for sale is an important step in your property-buying process that helps you enter into a contract, or bid at a property auction, with peace of mind – knowing that the contract has been carefully checked and addressed any critical special conditions and clauses.
But once the thorough contract review is done, it’s time to think about the next part of your property-ownership journey – including finalising your finances to manage your purchase and working with a professional conveyancer who can make your experience as a buyer stress-free and smooth.
To help you understand what happens after your contract review is finalised, familiarise yourself with these key steps:
Choose a conveyancer
Not all conveyancers are the same. Buying property – whether you’re a homeowner or an investor – is a significant investment. Because there are sometimes complex contractual issues to consider, as well as a range of legal processes to check through before ensuring you become the legal owner of the property you want to buy, using licensed conveyancers that are supported by experienced property lawyers can be the difference between enjoying a smooth, safe property settlement – and having things go wrong.
Always check your conveyancer’s credentials and experience
With our transparent fixed-fee service, digital convenience, and thousands of satisfied Australian clients, we can look after all your conveyancing needs – no matter how complicated.
Arrange pest and building inspection
Obtaining building and pest inspections is an important part of due diligence before any property purchase. If the contract for sale stipulates the purchase of the property is subject to a building and pest report and the report returns negative results, you may be in a position to withdraw your offer and receive a full refund of any deposit amount paid – something your conveyancer or solicitor can manage for you.
It’s important to note that, if you’re preparing to buy at auction, any request for a building and pest inspection report must be arranged prior to auction day. Remember – accessing results from a thorough pest and building inspection report before you place a bid help you make an informed buying decision and could help you avoid buying a property that comes with costly repair issues.
Pay your house deposit
The deposit is traditionally set as 10 per cent of the property purchase price and is paid at exchange of signed contracts. It is possible to negotiate this percentage, through a conveyancer or property lawyer. Once you have paid the agreed deposit, the real estate agent (or private vendor) must provide you with a receipt of your transaction.
The deposit will be held in the real estate agent’s trust account until settlement, with the amount of money that you pay as a deposit reducing what you need to pay at settlement.
Upon settlement of the contract, the agent holding the deposit releases the deposit amount to the seller, once they receive confirmation from both parties that the contract is settled.
What is a holding deposit?
A holding deposit is an amount of money that buyers may pay to a seller, as part of their offer to buy the property being sold. It’s usually 0.25 per cent of the property purchase price but can be negotiable. Payment of a holding deposit happens before any paperwork is signed – before the actual 10 per cent deposit is paid when signed contracts are exchanged) and is a way for the buyer to show how serious they are about the property, however, it is important to remember that payment of a holding deposit DOES NOT secure the property for you. Holding deposits are fully refundable up until exchange of contracts.
Secure formal loan approval
Whether you’ve chosen to work with a mortgage broker or a loan specialist directly at the bank, you need to let them know that you have signed the contract of sale, as well as informing them of the settlement date, and sharing the contract of sale with them.
At this point, depending on whether you had obtained pre-approval for your finance, your loan specialist may need to see updated financial documents, such as bank statements or proof of income. The lender will also organise a property valuation.
When your finance is officially approved (and assuming that any specific conditions of your finance and sale contracts, such as pest and building inspection reports, have been met), it’s time to tell your conveyancer or specialist solicitor that you are happy to proceed with the property purchase. They will act on your behalf to inform the real estate agent and vendor.
What happens if your mortgage application is refused?
If your home loan application is declined by your preferred lender, you can talk to a mortgage broker to explore loan options with other financial institutions.
If you signed the contract of sale subject to finance, it’s critical that you update your conveyancer straight away. Depending on the terms of your contract, if you are unsuccessful with your finance application, your conveyancer may be able to negotiate rescission of the contract and organise the refund of your deposit on your behalf.
Sign your loan documents
Now is the time to talk to your mortgage broker or loan specialist to sign your home loan documents.
It is important to check with your conveyancing specialist or solicitor to confirm the date of your property settlement and also clarify what other fees might be payable when settlement happens.
Protect your property purchase
Your home insurance obligations in Victoria
You, as buyer, become responsible for any damage to the property from the settlement date. Prior to that, though, the vendor is responsible.
To protect yourself, with complete peace of mind, consider arranging your property insurance from the date the contracts are signed. We recommend you speak to an insurer as soon as your contract has exchanged.
Strata insurance for a property you buy
Strata insurance provides cover for a building or common property that form part of a strata scheme. It’s usually taken out by an owner’s corporation. If your new home is part of an apartment complex managed by a body corporate, strata insurance is the responsibility of the owner’s corporation, and should be in place before the property is sold.
It’s recommended that you talk to your experienced conveyancer or solicitor about exactly what’s covered by this type of insurance, as you may also need additional contents or building insurance, depending on your circumstances.
No matter what insurance cover you need, remember that reviewing your insurance policy thoroughly is a smart thing to do, in order to ensure you have obtained the best possible cover that protects your investment.
Settlement periods vary and are outlined in your contract for sale – although they can sometimes be negotiated with the help of your conveyancer or property lawyer. For a successful settlement, each party (both buyer and seller) need to understand their rights and responsibilities and the importance of regularly communicating with your conveyancer or solicitor throughout the transaction.
To cover the full cost of your property settlement, talk to your professional conveyancer or specialist solicitor. Crunch your numbers correctly and be prepared to budget for:
- Legal costs
- Conveyancing fees (such as land title fees)
- Transfer duty (known as stamp duty)
- Any unpaid loan establishment fees, or other lending charges, such as Lender’s Mortgage Insurance
Depending on your specific contract of sale, a final inspection of the property you’ve bought is done in the days before your property settlement to ensure the property is in the same condition it was in when you agreed to the purchase.
This is the time that your conveyancing specialist can assist you to check all inclusions (and exclusions) of your contract.
Once settlement has occurred, the exciting business of preparing to move into your new property (or perhaps manage your investment property responsibilities as a landlord), begins. Depending on your plans for renovating, refurbishing, or simply enjoying, your to-do list will vary – and may be long, or happily short.
Cut spare keys for your new property
If you’ve bought more than just land, there are keys to collect and, to get off to a good start, arranging for additional spare keys to be cut ASAP is always recommended.
Redirect your mail
Ideally, filling in the request (including payment) to have your mail redirected to a property you are moving to should be done before you settle on your new property. After all, the process of having mail from previous addresses find you at your new address can take several days. Better late than never, though, so if you haven’t done it yet, decide on the time period you would like your mail officially redirected and lodge your request. Don’t forget to reach out, individually, to all the important companies and utility services that do need to know your new address. The sooner your mail comes to you directly, the sooner you can stop paying mail redirection fees.
With the right team of professionals around you – including a conveyancer, solicitor, qualified building inspector and a home loan specialist – you’re one step closer to achieving success as a property-buyer in Victoria – congratulations!
This article is provided for general information purposes only. Its content is current at the date of publication. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice based on your specific circumstances before taking any action concerning the matters discussed in this article.