Frequently Asked Questions

Here are some of our most frequently asked questions about buying a property:

What should I do before I buy a property?

• Obtain a copy of the contract and let us check it for you
• Arrange your building, pest and/or strata reports
• Contact your lender with details of the property
• Make an offer and negotiate a price
• Make sure your finance is approved unconditionally, and the terms are acceptable to you
• Have your deposit ready either cash, personal cheque or Deposit Guarantee Bond
• Inspect the property in different conditions and times of day
• Go to the local council and speak to the planning department; check on any nearby development, previous renovations etc.
• Talk to the neighbours if you can – they are often a fountain of knowledge about the area, the property and the neighbourhood

Are there different ways to buy?

The answer is “yes” and they are quite different in the processes involved. A brief overview is set out below:

Private Treaty

Private treaty is when you negotiate with the seller through the agent (or the seller direct if there is no agent) and then agree on a price. Once you are ready, contracts are then exchanged. Once contracts have been exchanged you then have the right to retain or waive the “cooling off period”.

What is a cooling off period?

Cooling off is a right you have at law to exchange contracts and have 5 business days from exchange to change your mind and pull out of the contract. If you pull out, you lose 0.25% of the price but any other deposit you have paid is refundable.

Giving up your cooling off rights – Section 66W Certificates

You may be asked to waive (give up) your cooling off right, that is, be locked into the contract immediately following exchange and not be able to change your mind. To do this you will be asked to provide a 66W Certificate that is signed by your conveyancer/solicitor, to say that you are prepared to give up this right.

Naturally, whether you retain your cooling off rights or not, it is critical that you are completely informed before you sign the contract.

Auction

When the hammer falls on your bid, you are the buyer of the property and there is no opportunity for you to change your mind. You will be required to sign and exchange contracts straight away. Naturally it is important that you make sure you have your deposit ready and have done your homework.

IMPORTANT:  There is no cooling off period when you buy at auction. Once you are the successful bidder, there is no going back.  This is why it is critical that you have the contract checked, make your enquiries and arrange your finances before you go to the Auction itself.

Are there things Contracts don’t tell us?

The contract gives us a lot of information about the title to the property but nothing about the quality of the building on it. This is what is commonly known as “buyer beware”. It is therefore very important to have carried out inspections of the property prior to exchanging contracts.

At Wollongong Conveyancing Services we will discuss all the “buyer beware” pitfalls with you prior to exchange, to ensure that you are aware of all the hidden risks involved in buying a property.

What are the steps in the conveyancing process?

Exchange – what is it?

This is when the contracts are checked to make sure they are identical, then “swapped” and dated. At this point they become legally binding, in other words, you are legally required to complete your obligations to buy as they are set out in the contract.

What happens between exchange and settlement?

Wollongong Conveyancing Services will investigate the title thoroughly, submit a list of questions to the vendor’s conveyancer and liaise with your lender to make sure they will be ready for settlement.

Is there anything I should do between exchange and settlement?

You must pay your stamp duty, sign your mortgage documents and make sure that you are ready with the balance of funds in time for settlement.

Why am I paying the other party’s costs at settlement?

No you are not. The contract provides for the Vendor to direct you how they want their sale monies drawn. They are directing us how to “spend” their money

Why am I paying rates?

You are not paying for the rates. You are contributing towards them from the date of settlement to the end of the quarter or financial year and in that regard the vendor then is responsible to pay them from the total amount payable on settlement (the vendor’s funds)

What is land tax?

Land tax is a tax levied on the ownership of land in NSW as at midnight on 31 December of each year. It includes vacant land or a house, flats, home units and holiday homes and is based on value. Your principal place of residence or land used for primary production is normally exempt from land tax.

Why do I pay land tax on the property I am purchasing which I intend to live in as my principal place of residence?

If the contract provides for a land tax adjustment and deletion of that provision is not agreed to by the vendor then, yes, you will need to pay land tax.

I am a first home purchaser. Do I get any assistance from the government?

You may be eligible for the First Home Owner Grant Scheme. However, as the First Home Owner’s legislation is constantly changing, click here to be linked to the Office of State Revenue’s website where you will find the latest in First Home Purchaser’s information.

You are eligible if:

• You are buying or building your first home as a natural person, not as a company or trust.
• You, or a joint applicant, are an Australian citizen or a permanent resident of Australia.
• Your or your spouse (including defacto spouse) have not resided in a residential property in Australia in which you acquired an interest, on or after July 1, 2000.
• You occupy the home as your principal place of residence for a period of at least 6 months, within one year of the completion of the transaction to which the application relates.
• You are at least 16 years of age.
• You have not already received a grant.

I have owned an investment home previously. Can I still be eligible for the grant?

A person is not eligible if they or their spouse (including defacto spouse) has had a relevant interest in any residential property in Australia prior to July 1, 2000, whether they live in it or not.

However, a person may be eligible if they or their spouse (including defacto spouse) has only ever had a relevant interest in any residential property in Australia on or after July 1, 2000 and they have not resided in that property.

If I previously owned vacant land but not a home, will I be eligible for the grant on the purchase or construction of my first home?

Yes. Vacant land is not regarded as residential property for the purposes of First Home Owner Grant.

If I have owned a commercial property, would I be disqualified from getting the grant?

Not normally, provided that you met all the eligibility criteria and the commercial property did not include a residence. For example, a shop with a residence attached.

Do I get a reduction on stamp duty if I am a first home buyer?

Yes, if the property is less than $500,000 there is a 100% reduction, and if the property is between $500,000 & $600,000 there is a partial reduction provided you meet the same eligibility requirements of the First Home Owner’s Grant.

There are two of us – are there differences in how we can buy?

You must decide whether you are buying as joint tenants or tenants in common.

 As joint tenants you buy the whole property as one. This normally occurs on the purchase of your home. There is no actual share and if one of the joint tenants should die, the property passes to the survivor/s.

As tenants in common, you own an actual share. It can be more or less than 50%, and that share will pass on a tenants death in accordance with his or her will. This normally occurs in commercial, industrial and investment property.

Should I take out insurance?

If you are buying a freestanding property, make sure you arrange your insurance well before settlement, as your lender will need to see it before providing funds. The property is at your risk and should be insured at least one day prior to settlement or you taking possession. We advise you have contents insurance as well.  If you are buying strata title, normally the owner’s corporation insures the building, but we recommend you arrange contents insurance, as the building insurance does not cover all items in the unit.

Why is the amount I am borrowing different to the amount available for settlement?

Your lender deducts their costs of setting up the loan, registration fees to lodge transfer and any discharge of mortgages and any other dealings. If there is stamp duty applicable on your purchase, they may also deduct the stamp duty owing on your mortgage. The lender also may deduct a mortgage insurance premium depending on how much you are borrowing of the purchase price of the property.

What is Mortgage Insurance?

It is a form of insurance your lender may require to effect your loan. If you fail to pay your mortgage the mortgage insurer will repay the mortgage debt and recover that debt from you. It usually occurs if you borrow more than 80% of the value of the property.

Is Mortgage Insurance of benefit to me?

No. It is to the benefit of the lender.