Getting into your first home can be very daunting!
In fact, the most common reason for people not getting their foot into the property market is because they say it's just so confusing. You go to one bank and they say no. You speak to another bank and they say yes. Someone says you need to do it one way and the next person says you need to do it the opposite way. This confusion often leads to procrastination and a result of putting it off.
Fortunately, the team here at Brookmoore Homes have a vast amount of experience with first home buyers and we know exactly what it takes to make the process simple and easy to understand.
We have broken this complexity down into a simple 7 step process..
Step 1. Pre-Assessment
First things first, before you go getting your hopes up, you will need to see if you qualify and what you qualify for.
Unless you have the whole amount saved to purchase a property outright, the majority of us will need a finance institution to help us purchase our home. Therefore, we need to see which bank wants to come to the party and give you the best deal.
Now, there is a right way and a wrong way to do this - and it will often depend on your personal situation.
As mentioned above, you can walk into one bank and get rejected at the door simply because of your situation. But then you can walk into the next bank and they will embrace you with open arms. The criteria can vary depending on your employment status, your current debts, your deposit amount, your relationship status, your dependants and even your residency status. There are so many variables and lenders change their policies weekly. It is very difficult to know who will accept you and give you the best deal. That's why we recommend talking to an independent mortgage broker.
A good broker will look at all your numbers and your entire situation and they will then come back to you with options for you to choose. They will also let you know what you qualify for and why. For example a lot of our clients cannot afford an existing house with their deposit. However, once they add the government grants and our incentives, they then qualify for a new home (if they are building). There are different grants available for different properties and they vary from state to state.
For example, in Queensland if you currently buy a new house and land package, you may be eligible for Stamp Duty Exemptions and the First Home Owner Grant of $15,000. Some banks will accept this as a part of your deposit. Which means, instead of having to save $50,000 to cover a deposit and stamp duty. If you build, you may be able to get in with only $20,000. Important information like this may be the difference between buying now or in 5 years time.
A good broker will guide you through this process and they will inform you on what your options are based on these situations.
Step 2. Secure A Location
Once you know what your budget is, you can then start to look at options within that price point. When it comes to buying a house and land package the first thing we look for is the right location. The biggest advantage we have is that we can build any house on nearly any block. Here at Brookmoore you tell us the area you want to live, we help you find options within your ideal location and then we design your dream home to suit your block.
Once you've found the right block of land you need to secure it by putting the lot on hold!
Land is selling faster than it ever has before. If you aren't ready, you will lose out and someone else will take your gold.
So does that mean you need to have your finance ready to put a hold on something? The simple answer is no!
Fortunately, when working with a company like Brookmoore, we help you secure the lot with no strings attached. That means you can place what's called an "Expression Of Interest" on a block. Which will temporarily take it off the market, whilst you finalise the house design and organise your finance. There is no legally binding agreement that ties you to buying the property, it's simply showing the agent that you are serious enough to give some form of commitment.
Note: pending on the location, many land agents will also want some form of holding deposit to put it on hold for you. Normally this will be between $1,000 and $5,000. However, it is very important to ensure that this will be 100% refundable for any reason.
It is also recommended to understand what the build will cost on this block of land to make sure the total package you are after is within your budget.
Step 3. Design Your Home
Ok so now the block is on hold, you have a little bit of breathing room. No more rushing, it's more about the nuts and bolts of exactly what you want before you take it to the bank. When dealing with Brookmoore Homes you would already know what house is going on the block and at what price. However, we are one of the rare builders that will allow you to make changes and customise the plans & inclusions before they are finalised for a contract. You want to move that door there and remove that wall here - sure no problem! We will have a full colour design booklet to guide your though so that you can customise this home to make it your vision that we are building!
You will need to get final plans, inclusions and pricing ready for the contracts.
Step 4. Sign Contracts Subject To Finance
Normally within 7-14 days after the EOI you will be required to sign a Land & Build Contract. If not signed, the agent will take the block off you.
Here at Brookmoore we ensure that both contracts are completely subject to finance (this is a must). It's worth noting that banks take their time to process finance applications so we recommend to get a "30 days subject to finance" clause if possible. It should be stated clearly on the contract (may vary state to state).
What does subject to finance mean? It means that if your loan application is refused or rejected, then you can choose to not go through with the purchase. It's a security for both parties, because normally land agents will require this clause so if you don't get finance after 30 days, they will want to sell it to someone else (unless you request an extension - ask us for more info).
Step 5. Finance & Valuations
The most time consuming part of the whole process is getting the banks approval. Once you've got both contracts signed by both parties, your broker will then order a valuation (or valuations) on the package. During that time, the broker will generally request all other documents they need from you to finalise an application.
Note: please understand that the banks require A LOT of information to approve you for a home. This isn't a $5k credit card. They need to ensure that everything you are presenting them is accurate and that you are a prime candidate to purchase a home.
What is a Valuation? A valuation is an assessment carried out by an independent third party that the lender employs to check whether the property you are purchasing is worth what you are actually paying. It is important to note that a valuation's vary from bank to bank. This is also why a broker can come in handy as one bank may give you a low valuation and another may give you a valuation on the money (which means you can purchase at that price).
Step 6. Formal Approval
Ok so you've signed all the forms, submitted everything to your broker and now you're waiting for that notification. Next you get an email from your broker that says "Congratulations your loan application has been successful - you have been granted Formal Approval". This is what we call an unconditional finance approval. You have now been granted permission to purchase your first home.
Step 7. Settlement
Once you get the formal approval from your lender. You will need to notify your conveyancer, the land agent & the builder (Brookmoore). Your conveyancer will then organise a settlement date for the land.
On settlement day, you won't need to be there. Your conveyancer will organise everything for the exchange of contracts and titles. When doing a house and land contract you will have what's called a "construction loan". This is a loan that is done in stages, which means you would only have a loan for the land portion after settlement (read more in our articles that explain what a Construction Loan is and how it works).
After settlement you are officially now a title holder of your own piece of Australian property.
After settlement the fantastic build team you chose to work with - Brookmoore Homes ;) - will get to work and start building the house of your dreams.