Australian Civil Liberties Union
Your Rights 2005
BUYING A HOUSE
Signing documents. Obtaining Finance. First home owners.
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.
(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).
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Australian Civil Liberties Union