So, you found the home of your dreams, arranged your finance, put in an offer and had it accepted. Congratulations. But what happens next? Read our guide to everything you need to sort out before settlement day.
There are few things more exciting than buying a new home, and signing and exchanging contracts can sometimes feel like a real milestone. It’s the end of a long and arduous process. But don’t stop just yet. There’s still plenty to do before you get hold of the keys and unlock the door to your new home for the very first time.
Here are 7 things you need to do between now and the day you move in.
Settlement happens when the ownership of your new home formally passes from the seller to you. It’s when you pay the balance of the purchase price in return for receiving the title deeds to the property.
The length of the settlement period – ie the time between when you exchanged contracts and paid the deposit and settlement day itself – is usually set out on the front page of the contract for sale you signed. Generally, it will be between 30 and 90 days, although it may be longer or shorter.
The good news is that you don’t have to attend the settlement meeting itself. Instead, your solicitor or conveyancer will usually represent you.
If you still only have conditional approval for your finance, it’s now time to make it formal. To give your lender as much time as possible to arrange the paperwork, you should do this as soon after exchanging contracts as you can.
In fact, if you made your to buy offer ‘subject to finance’ your offer will usually only stand for a limited timeframe, often 14 days. Within that time you’ll need to provide your lender with the documents they need (eg your proof of income), your lender will arrange a valuation and you will hopefully receive your unconditional approval (if you don’t you still need to show evidence of this). So act fast.
Buying a home is almost always a major investment and, if something goes wrong, it can often have a life-changing effect on our finances. That’s why, whenever you’re buying a home, you should always engage the services of an experienced solicitor or licensed conveyancer. So, if you haven’t yet engaged one, do it now.
Your solicitor or conveyancer will make sure you’re buying what you expected. This includes looking over the sale contract as well as researching the property to see whether anyone other than the seller has any rights over it. They’ll also calculate all the taxes and rates you need to pay, guide you through the settlement process and even represent you on settlement day.
Once your solicitor or conveyancer has worked out exactly what you’ll need to pay on settlement day, you should always speak to your lender to make sure you’ll have it available. Remember, you won’t simply be up for the balance of the property purchase price, you’ll also have to pay for stamp duty. You may also need to reimburse the seller for rates they’ve already paid, and even pay lenders mortgage insurance (LMI).
Most lenders make it a condition of giving you a loan that you also take out home insurance. This covers you the cost of rebuilding or replacing your home if factors outside your control damage or destroy it. Most people choose to bundle their home insurance with contents insurance so that they’re also covered if their valuable possessions are damaged or stolen.
Just before you settle, it’s vital that you perform a final inspection. This is your chance to make sure that you’re taking possession of the property in the same condition as the seller agreed to give it to you. Be sure to check that any inclusions are there and in good working order, such as the heating and cooling, or other major appliances. You should also make sure the walls, light fittings, windows and floor coverings are in the same condition as when you last saw them, and that the locks and keys work.
The seller’s real estate agent should arrange this final inspection for you.
On settlement day, your and the seller’s solicitors or conveyancers, as well as your lender and the seller’s lender, will work to transition your title and ownership (increasingly this is done digitally, rather than face-to-face). Your solicitor or conveyancer will make sure any mortgage over the property is removed and that the title in the land passes to you. They’ll usually also arrange for stamp duty to be paid on your behalf.
Meanwhile, your lender will pay the balance owing on the purchase price on your behalf, in exchange for registering a mortgage over the property. Once that happens, the lender will debit the amount they’ve paid from your account.
Now it’s time to collect the keys and move in.
Congratulations! You really do now own your new home.
Reproduced with permission from realestate.com