Finding a property that meets your requirements can be quite frustrating. Finding one that meets your requirements, within your price range which also meets the lender’s requirements for adequate security, is indeed a challenge!
Purchasing real estate can sometimes be a very complex process – especially if it becomes necessary to borrow to assist with the purchase. To alleviate much of the pressures involved in the purchase, particularly if it is for a home, a price range for the purchase particularly if it is for a home, a price range for the purchase should be established before starting to look at properties. If you need to borrow, a quick call to your lender of choice will inform you of the borrowing limits of that particular institution. Or, you could call mortgage broker who will give you loan information from the entire market. Many purchasers often forget to include Legal fees and Stamp Duty in their budget.
Now that you know precisely what your maximum purchase price is, you can go out and look at a broad cross-section of properties to get a “feel” for the market before committing. This will help you to determine which properties may be able to offer you value for money.
Making an Offer
Once you have found a property you like, the next step is to make your offer. This can be a little tricky as many vendors and real estate agents expect you to pay a deposit as soon as your offer is accepted. Sometimes this can be a very dangerous practice, as it is possible to lose your deposit if you are unable to complete the transaction. You should make your offer subject to a valuation report and perusal of your application by the lender. But, some vendors are not willing to wait this long, and some negotiation may be required. When you have the go-ahead from the lender, you are now ready to enter into an Agreement for Sale. This Agreement is the foundation document of your purchase transaction and should not be treated casually. It essentially outlines the terms and conditions of sale. You should get advice on this document before signing it. A typical agreement (there is no such thing as a “standard purchase agreement, as each vendor and purchaser have different requirements) details the amount of the deposit paid (very often 10 percent) and states the amount of time in which the completion must take place (usually 90 days).
If you are obtaining a loan to assist you with your purchase, now is the time to visit your lender or mortgage broker to start the application process. The broker would provide a list of documents required by the various parties in the transaction. Only after the lender receives all the information and documents required, will they underwrite the loan. If your application is successful you will receive an “Offer to lend” by the institution. After you have read, understood, signed and returned this offer, the lender’s attorneys-at-law would be instructed to prepare the deed of mortgage. The attorneys will require written confirmation that the property is free and clear from all encumbrances. These would include a WASA Clearance Certificate, WASA receipt for the last quarter, Lands & Building tax receipt, the existing lender’s redemption statement and the deed of release (once again, if you are using a mortgage broker, these documents will be obtained for you). They will also ask which attorney will be preparing the deed of conveyance. If you choose the same law firm to prepare both deeds, there is usually a discount on the fees for the second document.
Closing the deal
At this stage, the attorneys will calculate the stamp duty and any other out-of-pocket expenses together with any shortfall on the purchase price. On completion of the preparation of the deeds, and the receipt of all the final documentation, an appointment is scheduled for both the vendor and yourself (the purchaser) to sign the deeds. The attorneys will then send for the deeds to be registered and copies of the registered deeds will be sent to you a few weeks later.