Certificate of Title (the ‘CT’)
A certificate of title is issued by the government and demonstrates the ownership of a property.
The contract of sale obligates the buyer and seller to complete all of the steps necessary to transfer property.
The cooling off period is the time in which the purchaser may change his or her mind and opt out of the purchase. You usually have 5 days to change your mind if you sign the contract but have not yet got finance approved or carried out a pest and building inspection.
The disbursements are amounts that are expended on your behalf to external parties (such as local councils and government departments) in order for us to obtain information or conduct searches on your behalf. These are fixed costs determined by the authorities that provide the information.
“Exchange” is the point at which a binding contract (which has been signed by both parties) is passed from the buyer to the seller or vice versa.
If you are borrowing money, the finance date is the date by which you must be able to confirm that your bank or lending institution will lend you money.
Home loan pre-approval
Lenders normally offer ‘conditional’ pre-approval depending on the size of the loan you want and your financial circumstances. This approval indicates that you are eligible to apply for a home loan up to a certain limit. They are often obligation-free so neither you, nor your home loan provider, are committed to a loan contract.
Pre-approval is useful for showing vendors that you are serious about making an offer, and streamlines the process of finalising your finance before making an offer.
Off the plan
Properties can be advertised for sale before the building has been constructed. Buying this type of property is is known as “buying off the plan”. When you buy “off the plan”, you pay for a property where the end product might differ from your expectations, and in fact, be worth less than you paid by the time it is finished. If you want to buy “off the plan”, note that new protections and statutory remedies apply to contracts exchanged from 1 December 2019.
The “settlement” or “completion date” is the date on which the property transfer occurs. That is, the date by which payment of monies and the delivery of documents necessary for the registration of the new owner on title occurs.
“Stamp duty” is the amount the NSW State government levies on the transaction.
If you have already received conditional approval from your lender, final approval of the loan application will be granted on certain conditions (eg. a valuation report, providing evidence of assets or providing other documents required by your lender).
Your mortgage contract will generally be given to you at this point for your signature and this is often termed seeking ‘unconditional’ approval. Once these documents are signed, returned and checked by the lender, you and your lender are obliged to follow the terms of the contract.
If you have selected a property to purchase and you are finalising your finance, your lender will conduct a valuation of the home and land to assess the viability of your mortgage and the asking price. Paying too much for a property can put your equity and the lender’s equity at risk. If there is a large difference between the asking price and the lender valuation, your finance could fall through.
This is why it is crucial that you do your research on the property and look at similar recent sales in the area. If the asking price seems unreasonably higher than recent sales of similar properties, you may have difficulty obtaining finance for that purchase price.
Contact us on (02) 9150 6991 for your Sydney conveyancing and property law matter. We provide legal services throughout Sydney and regional NSW areas.