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Mortgage tips for buyers

Mortgage information you can understand

There's a lot to consider before you buy your next home and get your next mortgage. Here's a list of helpful tips.

It is best to research the property and the area.

Study the capital growth of properties in the area as well as potential rental income. Local real estate agents are good people to talk to.

If you're buying a unit the managing agent will have a full history of the unit and the apartment block. There will be a small fee for a strata search but it's well worthwhile.

Buy into an area that suits your lifestyle and needs. eg: close to shops, schools, transport, or beaches and parks.

A great source of information is the Real Estate Institute of Australia website. It's ideal for finding local real estate agents, market reports, online tools, and the property sites that best meet your needs.

For more information on the Australia Property Buyers Guide

If you get a pre-approval with ING DIRECT they can provide you with an RP data report on the area and the property you are interested in.

What does a home buyer's advocate do?

Buyer's Advocates or Buyer's Agents work for real estate agents providing advice on the pros and cons of particular properties for sale or lease. They also weigh up the investment risk and negotiate the best price and they charge for their services. In Sydney and Melbourne this is about 2% of the purchase price or around $6000, you need to weigh this up against the possibility of ending up with a smaller mortgage.

Good idea – get an inspection

Always have the property inspected by experts before you buy. It costs a little extra but it could save you a lot - in time, money and stress. (The Department of Fair Trading website has advice on fair and ethical practices for buying, selling and renovating.)

More good ideas – look closely

When you finally find a property that interests you here's a few things to look out for.

• Look at the property more than once.
• Look at it at different times of the day and night and throughout the week so you can understand traffic and noise levels.
• Try to look during a rainy day to check for leaks.
• Look for cracks in walls inside and out.
• If the house is old and the carpet is lifting look at the condition of the floorboards.
• Look out for signs of mould, white ants, borer and other problems.
• Look out for musty odours – they could mean rising damp or water damage.
• Look at the walls on the other side of the bathroom for signs of water damage and rotting wood.

It pays to understand the contract

• Make sure your solicitor or conveyancer reads your Contract of Sale.
• Make sure you're happy with what's included in the sale, such as fittings and fixtures. Did you want to include the outdoor BBQ, tools in the shed, any furniture? Ask all the questions you want until you are reassured.
• Lastly, make sure you have all these details in writing.

Negotiate the right price for you

You can only negotiate on a private treaty sale and the negotiations usually follow the same pattern – the seller wants the highest price and the buyer wants the lowest. Most people usually meet somewhere in the middle.

Auction tips

If you're attending an auction the secret is to be prepared. Here's some handy hints on how.

1. Be prepared

   Go to as many auctions as you can to get a feel for what happens. Check out prices in the area. Familiarity breeds confidence. Once you've seen how auctions work, you'll be confident enough to start bidding.

2. Inspect before you bid

   Make sure you get all your inspections done before you go to the auction. Once you're bid is accepted, you own the property, warts and all.

3. Get your mortgage sorted

   You need a written mortgage pre-approval before the day of the auction, so talk to ING DIRECT (1800 199 106) about getting a mortgage pre-approval for the day. You'll need a deposit too, usually 10% of the purchase price.

4. Set your budget

   It's easy to get carried away with the excitement of an auction and spend more than you wanted to. If you set a budget before hand and stick to it you won't overspend.

5. How do Auctions differ from Private Treaty sales?

   At an auction you're bidding against other potential buyers and the highest bidder wins.
   With a Private Treaty sale you make an offer to the real estate agent who then takes it to the property owners. Once you and the seller have agreed on the price a contract of sale is drawn up and signed by both parties – it's called exchanging contracts and it's when you put down the deposit.

6. What else should I know about Private Treaty sales?

   Once the contracts have been signed you usually have a cooling off period. During this time you can change your mind about buying the property but you have to let the seller know in writing to in order to get your deposit back. However the seller may still be entitled to keep 0.25% of your deposit. (This percentage varies from state to state).

7. What else should I know about Auctions?

   With an auction you don't have a cooling off period. Once you sign the contract you are committed. If you fail to go through with the purchase you'll lose your deposit. You could also be liable for:
   • Any deficit on the sale of the property within 12 months of the auction.
   • Reasonable costs associated with that sale.
   • The vendor for breach of contract.

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