Australian Civil Liberties Union
Your Rights 2005
Chapter 7
BUYING A HOUSE
Signing documents. Obtaining Finance.
First home owners.
Signing
documents
The
purchase of a home is probably the largest financial transaction that a
consumerenters
into during his or her lifetime. Unfortunately
contractual documents may be worded
to exclude rights and obligations which a purchaser believes he is entitled to
receive.
To ensure that the contract for the sale of land and/or the house which you
intend to
buy adequately protects your interests you should consult a solicitor. Do not
sign any documents
not even a sale-note without consulting a solicitor. Although you will have to
pay
fees for a solicitor’s services on your behalf, it is a sensible way to proceed.
A
signature to a written contract is generally interpreted at law to mean that the
party
signing has agreed to all the statements it contains. Consequently you should
not rely
on any oral statements which are not contained in the written document which you
sign.
Make sure you understand what rights your contract gives you to require that
your builder
rectifies defects which you discover after moving into your home. Standard-form
contracts
usually provide for a period of three months in which a builder shall be liable
to
rectify defects notified by a purchaser.
A
solicitor can conduct relevant searches of title, check the contract of sale,
arrange bridging
finance if you are waiting for the sale of your present house, make enquiries
about
council and water rates etc., ensure the seller has title to the property and
attend settlement
when the difference between the deposit and the full price is paid. Many
people
do these things without a solicitor, using a “do it yourself” conveyancing kit.
But the
process of buying a home without the help of a solicitor can be a great hassle
and sometimes
a bit risky. If you shop around you can often get conveyancing done by a
solicitor
at a reasonable fee.When you are arranging finance don’t forget “hidden” costs
like
stamp duty, solicitor’s fees, Titles Office fees, and search and enquiry fees
etc. Don’t buy
a house you can’t afford.
Home
Finance
(1) Bank Finance. The first place to go for home purchase finance is a bank. Their interest rates are generally lower than the other major sources of finance.
(2)
Finance Companies.
If
the bank mortgage is insufficient to meet the difference between the selling
price
and deposit available, you might decide to seek a second mortgage. Normal
sources for
such finance are the finance companies.When dealing with a finance company you
should
make sure that you are satisfied about the interest rate and early repayments.
Ask what
proportion of the repayments is interest and not capital. Remember that the
effective
interest rate is much higher then the yearly “flat” rate.
(3) Building Societies. An alternative to combined bank and finance company loans is permanent building society finance. Building society loans are not usually subject to the limits on bank loans and they can lend a high percentage of their valuation of the house. When they lend over 70% of valuation they will normally require the borrower to take out a policy of insurance of the loan, often with high premiums.
(4) Loans for War Veterans. Loans are available for war veterans and certain serving members of peace time services. These loans are extraordinarily generous.
(5)
Co-operative Housing Societies. It is
possible to get home finance through housing societies other than the familiar,
much advertised,
permanent building societies, and although the upper limits of the loans are
low,
their terms are particularly generous.
First
Home Owners. Details
of grants available to first home buyers can be obtained by
phoning the Department of Community Services. From 1 July 2000, if you are
buying or
building your first home you may be eligible for a grant of $7000. It must be
your principal
place of residence (ie not a holiday home or investment).
Australian Civil Liberties Union