Home Loans Made Easy

By Craig Corbett

CONTENTS

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a Step by step guide to the loan approval process

3

b Choosing the right Solicitor/Conveyancer

7

c First Home Owner’s Grant and First Home Plus Entitlements

8

d Signing Contracts Safely 10

e Moving Tips 12

f Pest And Building Inspections 15

g Pre-Settlement Checklist 17

h Your Future Relationship With CHOICE HOME LOANS

19

i The CHOICE HOME LOANS Guarantee 20

STEP BY STEP GUIDE TO THE LOAN APPROVAL PROCESS

For some people, looking for a home loan can be very stressful and/or confusing. The staff at Choice Home Loans would like to help make the loan process as hassle free as possible. In an attempt to reduce the stress levels, we have put together this step by step guide to help you understand the process involved in gaining your home loan approval. We have included two guides, one for purchasing and one for refinance. PURCHASING A PROPERTY: Step one A meeting is arranged with yourself and the loan originator to go through the different options available to you. Once a decision has been made on the lender, the amount to be borrowed and the product, the application needs to be filled out and signed with the relevant documentation collected. Step two The application is sent to the nominated lender for assessment. During the next 48-72 hours the loan will be approved conditionally. Whilst this takes place the lender will inform us of any additional documentation they might require. Meaning : Conditional approval – approved subject to further information

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Step three As the loan has been conditionally approved and you are aware of the amount that can be borrowed it is time to start looking for a property, if you have not already done so. Step four Once a property has been found and we are in possession of the front page of the contract of sale, a valuation of the property is ordered. (The valuation is only ordered if required). Step five Upon return of the acceptable valuation, usually 3-4 working days the loan is processed for unconditional approval, this can take up to 2 working days depending on whether the application involves mortgage insurance. Once unconditional approval is granted, it is time to discuss exchanging contracts. Step six Within one and a half weeks you will receive by mail your letter of offer and mortgage documents. These need to be forwarded to your solicitor/conveyancer for signing. In some cases you will be asked to attend a bank branch to sign and produce 100 points of ID (Birth certificate and licence). Step seven You will be required to organize insurance on your new property prior to settlement. Either send a copy together with the return of your mortgage documents to the bank, or forward one to us and we will ensure that the bank receives this copy prior to settlement.

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REFINANCE: Step one A meeting is arranged with yourself and the loan originator to go through the different options available to you. Once a decision has been made on the lender and the amount to be borrowed, the application needs to be filled out and signed with the relevant documentation. Step two The application is sent to the nominated lender for assessment. Taking between 48-72 hours, the loan will be approved conditionally. During this time the lender will inform us of any additional documentation they might require. Step three A valuation of the property is ordered, the valuation is only ordered if required. Depending on how long ago the original valuation was done and the amount of equity available will depend on whether a new valuation will need to be ordered. Step four Upon return of the acceptable valuation, usually 3-4 working days the loan is processed for unconditional approval. This can take up to 2 working days depending on whether the application involves mortgage insurance. Step five Within one and a half weeks you will receive by mail your letter of offer and mortgage documents. These will need to be signed by all parties to

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the loan & returned. Step six Staying with your current Lender: You will be required to provide a new copy of your insurance policy prior to settlement. If you are refinancing with the same lending institution you will need to forward a new copy, sometimes the minimum required insured amount would have changed from when you first acquired the home. Changing Lenders: If you are changing lending institutions you will be required to provide a certificate of currency showing the new lending institution as being an interested party. Secondly if you are changing lending institutions you will need to provide a copy of your original loan contract to be exempt from mortgage stamp duty. Failure to provide this document will mean you will not be exempt. To enable a quick settlement when changing lending institutions you should contact your lender and sign a discharge authority. Step Seven With either of these requirements from step six, you can either send a copy together with the return of your mortgage documents to the bank, or forward one to us and we will ensure that the bank receives the forwarded information prior to settlement.

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CHOOSING THE RIGHT SOLICITOR When choosing the right Solicitor to handle your purchase there are a few things you should take into consideration before doing so:

1) Take advice off family and friends, who may have used solicitors before you. They will always tell you the truth on their past experiences.

2) Obtain a list of services each solicitor will provide and the

individual cost for each service. 3) The most common mistake people make is to select the solicitor

that is the cheapest. This may lead to a disappointment. Try to select solicitors that will concentrate on you, not one that will be fitting you in around their schedule.

At the end of the day the decision of whom you choose is up to you. Choosing someone that you feel comfortable with and trust is a major factor as you will be dealing with them and taking their advice throughout the sale/purchase of the property. If you like we can recommend a solicitor we deal with regularly. We do not receive a fee from any solicitor for this.

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FIRST HOME OWNER GRANT ENTITLEMENTS

You are eligible for the First Home Owner Grant if this is the first time you and or your Spouse/de facto have owned a property jointly, separately or with some other person in any State or Territory in Australia. The First Home Owner Grant is $7,000. The NSW Office of State Revenue (OSR) publishes a FACT SHEET with the full terms and conditions applicable to the First Home Owner Grant. You can download a copy at www.osr.nsw.gov.au.

FIRST HOME PLUS ENTITLEMENTS

The First Home Plus Scheme is an OSR initiative for First Home Buyers, similar eligibility criteria to First Home Owner Grants.

The First Home Plus Scheme means established homes valued up to $500,000 are duty free for First Home Buyers. Discounts are available for

Purchase Price Usual Duty First Home Plus Duty Savings

$250,000 $7,240 Nil $7,240

$300,000 $8,990 Nil $8,990

$350,000 $11,240 Nil $11,240

$400,000 $13,490 Nil $13,490

$450,000 $15,740 Nil $15,740

$500,000 $17,990 Nil $17,990

$520,000 $18,890 $4,498 $14,392

$550,000 $20,240 $11,245 $8,995

$570,000 $21,140 $15,743 $5,397

$600,000 $22,490 No Discount Nil

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established homes valued between $500,000 and $600,000. The First Home Plus means vacant blocks of residential land valued up to $300,000 are duty free for First Home Buyers. Discounts are available for vacant land valued between $300,000 & $450,000. See table above.

See fact sheet for full terms & conditions.

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Purchase Price Usual Duty First Home Plus Duty

Savings

$100,000 $1,990 Nil $1,990

$200,000 $5,490 Nil $5,490

$300,000 $8,990 Nil $8,990

$350,000 $11,240 $5,245 $5,995

$400,000 $13,490 $10,490 $3,000

$450,000 $15,740 No Discount Nil

SIGNING CONTRACTS SAFELY

1. Negotiate price with real estate agent who will talk to the vendor (seller.)

2. Once the right price has been negotiated, you usually exchange

contracts with a 0.25% deposit this takes the property off the market so no one else can make an offer on the property. This avoids gazumping. Not all agents ask you to sign a contract. This is decided by the Real Estate office.

3. Usually the vendor grants a 5 day cooling off period, however it’s quite common for the vendor to allow up to 10 days. During this cooling off period your solicitor will organise building & pest reports at your request & Choice or the lender will organise the valuation.

4. Once you are happy with all the reports &/or negotiated all the necessary pre settlement conditions if any, your Solicitor will now grant the exchange on the property. This is usually done with a 10% deposit of the purchase price paid to the Real Estate, which is put into a trust.

5. Settlement unless negotiated otherwise will usually occur 42 days from the contract date.

FAQ (Frequently asked questions) What happens if I don’t have the 10% deposit when the cooling-off period expires

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There are 3 ways to handle this situation. 1. Either Choice or your solicitor can organise a bond to cover the

10% deposit up until settlement, whether this be a short or long settlement. However, this bond does incur a premium ask Choice or your solicitor for a quote, as the premium varies depending on amount & length of guarantee.

2. Negotiate with the vendor, via your solicitor or real estate agent to allow a 5% deposit to be paid. This will have to be discussed with the vendor a few days prior to the cooling off is due to expire.

3. If you are buying & selling simultaneously then sometimes the deposit the purchaser has put on your property can be released and used as your deposit for the property you are purchasing. Again this will have to be discussed via the real estate or solicitor with the purchaser of your property a few days before the cooling off is due to expire.

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TIPS TO CONSIDER WHEN MOVING It is very important to remember to tie up all loose ends before moving and this can be very hard with 101 different things going on in your mind. So Choice Home Loans has created a basic list of tasks that have to be handled before the big move. * 6 weeks before the move The first thing you should do is to book a removals company or truck for the day. Make sure you find out the following: • Costs, • insurance, • packing, • loading and • Delivery and claims

procedures with your mover. Fill out a “change of address” kit and start to notify anyone you need to of your new address, examples: • Doctors/Dentist, • Accountants, • Credit Cards/ Health Care

Cards & Medicare Cards, • Employers, • Insurance companies, • Financial institutions, • Veterinarians and • Magazine/Newspaper

Subscriptions & • AEC (Australian electoral

commission).

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* 3-4 weeks before the move It is recommended you start packing. Get rid of any items/articles you no longer use. If you require boxes many truck rental companies will provide them. Arrange to cancel utilities and services at your old home and have them installed at your new home. • Water Board, • Council rates, • Telephone/internet, • Gas/ Electricity ; and, • Foxtel

Organize car license, registration and car insurance changes. Clear up outstanding accounts. (Sometimes finalized by solicitor). Leave forwarding address with Post Office. (Change of address form included in package). * 2-3 days before the move Arrange the cash or cheque to pay the driver on delivery day. Set aside valuables and legal documents to go with you, not on the truck.

* On moving day Make a list of all the items and boxes loaded onto the truck. Leave a contact number for the driver to reach you. Before signing the agreement with the driver, make sure to read the conditions and keep it in a safe place until goods are delivered.

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Clean each room as it’s packed up. You will need plenty of cleaning materials. Before leaving, check to ensure water is turned off and nothing is left behind and all doors and windows are locked.

HANDY TIP:

If you have changed financial institutions, set up and/or closed accounts, make sure all companies such as employer and any companies that direct debit have

your new account details.

A good way to ensure you have notified everyone of the account change is to go over the last 6 months bank statements.

**NOTE** This is a basic guide. You may or may not require all

information provided. If you require any more assistance, please do not hesitate to call us on 1300 784 166 and we will help as much as possible

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PEST AND BUILDING INSPECTIONS If you are purchasing a property: It is advised to have your solicitor arrange both a pest inspection and building inspection before unconditional exchange of contracts. Pest inspection The pest inspection will check on any possible infestations such as termites and borers that may be located thoughout the property. Building inspection The building inspection will uncover any structural or other defects that cannot always be detected with a cursory viewing of the property. *Buying a new property

Don’t be fooled into believing that these inspections are not needed on a new property. There have been cases in the past where termites have been located on properties that are only a few weeks old.

*Buying a pre-loved property

Usually building inspections on a pre-loved property highlight a few defects. This is to be expected when buying a pre-loved property. However most of the defects that are evident are usually minor

and nothing to worry about. Unless there is evidence of severe structural problems to the property, there is no need to withdraw from the sale. If you have any concerns or do not understand the inspections, it is advised to talk to your real estate agent or solicitor. If there are any particular problems in the reports that can be fixed before settlement, your real estate agent or solicitor

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will contact the owner and a satisfactory result can be negotiated between the parties. This usually involves the owner agreeing to complete some repairs or both parties agreeing to an adjustment to the asking price, which reflects the value of those repairs.

THE NO.1 RULE IS TO NEVER BUY A PROPERTY

WITHOUT BOTH INSPECTIONS

FAQ (Frequently asked questions) What happens if I have put the 0.25% holding deposit on the property I am purchasing and either or both of the reports come back beyond what I think is repairable? Do I get my deposit back? There are 3 possible options to this question.

1) Discuss the reports with your solicitor or real estate. Who knows it may not be as bad as you originally perceived.

2) If required organise to have a professional inspect and quote the problem.

3) If the problems cannot be resolved between you and the vendor with either the reduction of price or repairs, the deposit is forfeited if you pull out. On the upside, think of the money you have saved on repairing

the damage.

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PRE-SETTLEMENT CHECKLIST Refinance When you are notified that your loan has been unconditionally approved, the following steps need to be completed before settlement can take place:

1. If you are refinancing to another lender you will need to complete and return a discharge authority to your old lender. 2. Receive mortgage documents. 3. Sign mortgage documents. 4. Organise a copy of insurance indicating the new lender as the first mortgagor and new minimum insurance requirement as indicated on the mortgage documents (if you are not changing lenders, they will still require a new copy). 5. Photocopy your original loan offer.

6. Mail steps 2 – 5 to lender.

7. Three days prior to settlement – call solicitor to find out what

cheques need to be drawn.

Purchase When you are notified that your loan has been unconditionally approved, the following steps need to be completed before settlement can take place:

1. Receive mortgage documents. 2. Sign mortgage documents with solicitor. 3. Organise a copy of insurance indicating the new lender as the first mortgagor and the minimum insurance requirement as indicated on the mortgage documents.

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4. Photocopy your original loan offer. 5. Mail steps 2 – 4 to lender.

6. Given Choice Certified Birth and/or Marriage Certificate.

(Only if you are a first home buyer).

7. If you are a first home owner ensure your solicitor has organised

exemption of stamp duty.

8. Three days prior to settlement – call solicitor to find out what cheques need to be drawn.

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Your future relationship with Choice Home Loans

Thankyou for choosing to let Choice Home Loans assist you to make one of the most important decisions of your life, your Mortgage. We pride ourselves on providing a high level of service to you now as our new client as well as way on into the future as we would like you to remain with us as a lifetime client. We would like for your initial experiences with Choice to be as enjoyable & enlightening as your future encounters with us. One of the biggest compliments you can give us is to refer, or mention us to your colleagues, friends or family who may be able to use our services to assist them to reach their financial goals. Whether you are refinancing, checking your options as to fixing your loan, mortgage health checks, up or downgrading your home, buying or selling an investment property we would like to be your first point of contact. You can call us with queries or scenarios as little or as often as you would like. Some aspects like account balances etc, due to the privacy act we may not be able to provide, but I think you will be pleasantly surprised as to how many of your questions we can answer over the phone without being put on lengthy queues whether in the Branch or over the phone.

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THANK YOU FOR BEING A CUSTOMER OF

As a valued customer we would like to let you know …

Our services to you, is our guarantee and throughout the duration of your loan we promise to be of assistance to you.

We understand that throughout your life situations can change, whether they are planned or not. At times like these we can help you ... ♦ If you have doubts about your loan structure at any time we will gladly reassess

your loan and promise to provide you with the best loan to suit your needs ♦ If your situation changes for any reason or you are experiencing financial

difficulties, please let us know ♦ If you decide to purchase a new home, investment property or just wish to

refinance your current loan, we will provide advice and support

DON’T FORGET WE ARE HERE TO HELP!!!

If you need us…. Just call

1300 784 166

Home Maker Mortgages Pty Limited trading as CHOICE HOME LOANS First Floor 1/150 Merrylands Road, Merrylands 2160

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