OF BUYING A HOME by olq42616


                                                                                THE GOLDEN RULE OF BUYING A HOME
                        Cost of Purchasing a Home

                                                       The Step by Step Guide
                                TIPS FOR HOME BUYERS

                                                        to Buying Your Home

                  OF BUYING
                   A HOME
Contact Details
Branch: Member Service Centre, Brisbane Central Station Concourse
Post:    GPO Box 648, Brisbane QLD 4001
Phone: 1300 362 216
Fax:     (07) 3221 1672
Email: info@railwayscreditunion.com.au                                                                             ABN 91 087 651 090   AFSL 234536
Website: www.railwayscreditunion.com.au
The GOLDEN Rule of Buying a Home.
                                                                                               The total cost of
                                                                                           is usually around     purchase
                                                                                                              5% of the price
                                              DEPOSIT (What you have saved)
                                                                                          of the home (but
                                                                                                             can be a lot less
              YOUR                                            +                                 for first home
               NEW                            LOAN (What you need to borrow)
              HOME                                            +
                                            COST OF PURCHASE (See page 3)


                           Tips for Home Buyers.
Finding a home              Shopping round before you buy is one of the best ways to help you decide what home suits you
                            and whether you’re paying the right price for it. We recommend looking at www.realestate.com or
                            www.domain.com.au to search for property/homes you might be interested in.
Building/renovating         Usually you need to start full loan repayments straight away, while your house is under
a home                      construction. This can become costly if you are renting while this is happening. At Railways Credit
                            Union we don’t require your first full repayment until the home has finished being built, however
                            we do require interest only repayments until that time. There may also be progress valuation and
                            progress draw costs associated with building/renovating your home.
Price of the property       You are able to put in an offer on a property under the advertised price.
How much can                You should always be careful when deciding how much you need to borrow as the maximum
I borrow?                   amount of money you can borrow is based on the property’s valuation, not purchase price.
                            Valuers may value property less than the purchase price. This means you may need to save a little
                            bit more of a deposit.
Interest Rate               Different financial institutions offer different types of interest rates for home loans.
                            The type of interest rate that suits you best depends on how long you want the loan for, whether
                            you want the rate to stay the same for a period of time, among other financial needs.
Repayments                  If you want to find out approximately how much you will need to repay each fortnight, visit the
                            TOOLS section on our website at www.railwayscreditunion.com.au and use our ‘Loan Repayment
                            Calculator’. When we assess your loan, we will determine whether you are able to meet the
                            fortnightly repayments.
What is an Overdraft? A mortgage secured overdraft is a revolving line of credit allowing you to group all of your credit
                      needs (buying a home, buying a car, making renovations, personal expenditure) into an all-in-one
                      account. You can have your salary deposited straight into it if you like, but you don’t need to
                      make any set repayments (just interest only repayments if you’ve borrowed up to your limit).
                      A mortgage is taken as security and you can borrow up to a percentage of the value of the
                      property/properties offered as security.
What is a Term Loan?        A term loan allows you to borrow an amount of money and repay it over a set period of time.
                            The amount you can borrow is determined by the value of the property/properties offered as
                            security and your financial circumstances (such as how much you have saved as a deposit).
                            Most institutions will lend up to 95% of the value of the property you are offering as security.
                            At Railways Credit Union, one the major things we look at is your net income (take home pay),
                            your financial commitments (such as credit cards and other loans), and your general living costs.
                            We can then determine if you would be able to comfortably meet the loan repayments.
Contract Termination        If a buyer terminates a ‘Contract of Sale’ at any time during the stipulated 5-business day cooling
                            off period, other than due to a condition in the contract, they will have to pay the seller 0.25% of
                            the property price on the Contract. There is no additional GST payable on this amount. If the buyer
                            has elected to waive the cooling off period provision they cannot terminate a Contract and therefore
                            will not incur any cost.

                                                           Page 2
                                                                                              The tot
Cost of Purchasing                                                                        is usuall al cost of purc
                                                                                         of the h around 5% of t se
                                                                                                 ome (bu
                                                                                                                  he price
a Home.                                                                                       for firs t can be a lot le
                                                                                                      t home
                                                                                                             buyers). ss

Cost of Purchase               Usual Requirements                                 Details
Legal Fees                     These can include:                                 Solicitor’s costs and search fees are paid to
                               • Solicitor or conveyancer fees                    your solicitor. Solicitor’s costs can range
                               • Search fees (e.g. council search).               from approximately $300 to $800.
Inspection Fees                These can include (but are not limited to):        Inspection fees are paid to the appropriate third
                               • Property and pest inspection                     party you employ to undertake the inspection.
                               • Identification survey (purchasers don’t often
                               choose to do this however if there is an error
                               in boundaries it’s the purchaser’s problem)
                               • Strata records inspection (for unit or
Government Fees                These can include:                                 Stamp duty is a state tax required by the
(collected by your Solicitor   • Transfer stamp duty                              Government. It is imposed on written
and forwarded to               • Search fees                                      documents that record or affect certain types
the Government)                No transfer duty will apply to the purchase of a   of financial or legal transactions.
                               first home up to $250,000. First Home buyers       For more information about stamp duty visit
                               receive a rebate if the price exceeds $250,000.    www.osr.qld.gov.au.
                               This rebate is capped at $2,500 and reduces
                               by $100 for every $10,000 over $250,000. The
                               rebate cuts out for homes more than $500,000.
Government and                 These can include:                                 Registration of documents usually costs
other Fees                     • Mortgage stamp duty                              approximately $310.
(collected by your Financial   • Registration of documents                        Title search fee usually costs approximately $30.
Institution and forwarded to   (to Dept. of Natural Resources)                    Credit Reference checks usually cost
the Government)                • Title searches                                   approximately $10 per borrower.
                               (to Dept. of Natural Resources)                    Stamp duty is a state tax required by the
                               • Credit checks                                    Government. It is imposed on written
                               (portion paid to Baycorp)                          documents that record or affect certain types of
                               No mortgage duty will be payable by a first        financial or legal transactions.
                               home borrower for the first $250,000 of a loan     For more information about stamp duty visit
                               to buy or build their first home. Mortgage duty,   www.osr.qld.gov.au
                               at the rate of $0.40 per $100 or part of $100,
                               will apply to amounts secured in excess of
Financial Fees                 • Loan establishment fee                           Fees at Railways Credit Union total approximately
                               • Valuation fee (if required)                      $350 (loan establishment fee).
                               • Mortgage insurance (usually required if you      Valuation fee (if required) is usually about $200
                               borrow over 80% of the value of your property)     but varies depending on the location of the
                                                                                  Mortgage insurance is only required if you
                                                                                  borrow more than 80% (for a loan) or 78% (for
                                                                                  an overdraft) of the value on the property. The
                                                                                  cost depends on the amount borrowed.
Miscellaneous Fees             These can include:                                 For peace of mind you can take out insurance
                               • Insurance (such as home & contents and           to protect your material goods and your
                               sickness & accident).                              repayments (in the event you might get sick or
                               Some financial institutions may require you to     injured). Insurance can cost you a few hundred
                               have home and contents insurance as a              dollars each year.
                               condition of the mortgage.                         If you take insurance through Railways Credit
                                                                                  Union you can pay your premium monthly
                                                                                  instead of annually at no extra cost.
Moving Fees                    These can include:
                               • Connection for services
                               • Removalist, storage, etc…
                                                             Page 3
          The STEP BY STEP Guide
             to Buying Your Home.
Some information obtained from Real Estate Institute of Queensland website.

1.    Start saving a deposit and find out your borrowing capacity from the Credit Union.
2.    Choose a solicitor and meet with them. Ensure you fully understand the process of buying a home, including what the
      solicitor will do for you, what costs you will be charged, and when you will be charged.
3.    Decide on a location where you would like to buy and start researching property sales and visiting homes you are
      interested in. Examine real estate agent’s offices, listing magazines, newspapers and the Internet.
      Visit www.realestate.com.au, or www.domain.com.au.
4.    Approach a real estate agent and inspect properties, making notes on each property visited. You may be able to take
      photos/video of the property. Clarify inclusions with agent (e.g. fixtures such as dishwasher – make sure everything is
      included in the Contract).
5.    Decide on the suitability of the property and the price you are prepared to offer.
6.    Obtain from the real estate agent a ‘Disclosure to Buyer’ form and a ‘Contract of Sale’ with a ‘Warning Statement’ attached.
7.    Put in an offer and sign the ‘Contract of Sale’ with any special conditions listed.
      You will need to pay a deposit to the real estate agent when signing the contract. The deposit is held by the real estate
      agents and is released on settlement. The payment of a deposit to the agent does not mean you have a binding contract.
      This only occurs after both you and the seller(s) have signed the contract.
      Conditions in your contract usually include things such as:
      • Subject to building and pest inspection.
      • Subject to finance (by a certain date and at a certain financial institution –make sure you have an answer on the loan
        by this date.)
      • Subject to sale of existing property
      Additional conditions can make the contract less favourable for the seller and they may choose not to accept your
      conditional offer.
      Queensland contracts usually contain a standard clause advising that a building and/or pest control inspection is to be
      completed. If these inspections reveal any problems you can go back to the vendor and:
      • adjust the sale price;
      • make the contract conditional on the vendor fixing the problem; or
      • terminate the contract.
8.    The agent will submit the ‘Contract of Sale’ to the seller. If your offer is accepted, request a copy after it’s signed and
      dated by the seller.
9. Make a formal loan application immediately after your offer is accepted. Wait for your application to be assessed.
10. Advise your solicitor the contract has been accepted. They will then do your conveyancing & make inquiries on the
      property. These are made to various Government bodies and involve issues such as zoning, land tax, land development,
      etc… If the property is a unit, your solicitor should perform a strata-records inspection.
11. If your ‘Contract of Sale’ is subject to a building and pest inspection, ensure this is done within the specified time frame.
      It is required by law that the inspector must be licensed by the Building Services Authority. Verify this by logging onto
12. Solicitor completes transfer documents including a Form 1 Transfer (this is a document that verifies the change in
      ownership from seller to buyer). You need to pay transfer stamp duty to your solicitor on this document. Prior to
      settlement, ask you solicitor when this will need to be paid and how much it will be.
13. Settlement. This involves paying the rest of the purchase price. You then get legal title. The settlement date is always
      specified in the sale contract, although it can be varied by mutual consent of both the seller and purchaser. The property
      must be handed over in the same condition as it was on day of inspection by the purchaser before the contract was
      signed. A property inspection is therefore recommended a day or so prior to settlement. You are entitled to do this.
      You need to ensure you have sufficient money available to cover your contribution (i.e. as opposed to the amount you are
      borrowing) towards settlement. As this is usually required by bank cheque you will need to ensure you have “cleared”
      funds available for this purpose. There is no need for you to attend settlement as your solicitor/conveyancer will usually
      attend on your behalf.

                                                              Page 4
Glossary of Terms.
This Glossary of Terms has been adapted from the Home Path Pty Ltd website http://homepath.com.au/guest/

Acceptable Referee:          Includes an accountant, a solicitor, a magistrate, a teacher of at least 5 years' standing, a vet, a doctor, a dentist and a justice of the peace.
Acceptance:                  Agreeing to be bound by the terms and conditions of an offer. Once an offer has been accepted, an agreement is formed.
Adjustments:                 Costs such as water rates, council rates, etc., which have been billed to the seller, for which the purchaser may now be liable.
Adjustment of Rates:         Land tax and council and water rates are adjusted at the date of settlement. They are shared by the buyer and seller in proportion to the
                             amount of time each owns the property in the period for which the rates are charged.
Agent:                       A person authorised to act on behalf of the person selling, purchasing, letting or managing a property. A typical example is a Real Estate
                             Agent who acts on behalf of a person selling a property.
Allotment:                   When an area of land is subdivided into smaller blocks of land, these smaller blocks of land are known as allotments. They're also referred
                             to as lots, building blocks or blocks of land.
Amenity:                     A feature of a home or a neighbourhood; for example, the sporting facilities in an area.
Annual Levy:                 The fee paid to a Body Corporate for a Strata or Common Property plan to cover various administrative cost relating to the common property.
Annual Percentage Rate       An interest rate expressed as a percentage per annum. The APR on a loan account is applied to the unpaid balance of the account to
(APR):                       calculate the interest payable on the loan.
Application Fee:             The fee that may be charged by a home lender when you make a formal loan application.
Appraisal:                   An estimate of property value as stated by a professional valuer.
Appreciation:                When the value of the property increases.
Architrave:                  A moulding surrounding a door or window.
Asking Price:                The price at which a seller lists a property for sale.
Auction:                     A public sale at which property is sold to the highest bidder above a reserve price.
Beam:                        A horizontal structural support which is load bearing.
Bids:                        A person’s verbal offer during an auction to buy a property for a particular price.
Bill of Sale:                A written agreement whereby ownership is transferred, but the original owner is allowed to retain possession.
Bond:                        Money paid by a tenant and held by Rental Tenancy Board to help ensure against losses from non-payment of rent or damage to the property.
Breach of Contract:          Breaking the conditions of a contract.
Bridging Finance:            A short term loan usually taken out to purchase a new property prior to sale of an existing property.
Building Regulations:        Rule of a legal or statutory nature by which local councils control the manner and quality of buildings.
Buying Price:                The price a seller accepts to sell their property.
Capital Gain:                The profit made when a property is sold for more than the original purchase price.
Capital Gains Tax:           A Federal Government tax on the monetary gain made on the sale of an asset.
Certificate of Title:        This is the document of title to land. It identifies ownership of the land, registered mortgages, the dimensions of the land, any encumbrances
                             or easements. The Certificate of Title is usually held by the lender as security for a loan.
Certificate of Currency:     A certificate issued by an insurer showing that a building is insured.
Clear Title:                 Where there are no charges - for example, mortgages - on title.
Commission:                  The fee or payment made to a real estate agent for selling your home.
Common Area:                 An area within a Strata Title complex which is used by many people - i.e., stairs, driveways, etc.
Comparison Rate:             A "Comparison Rate" is an attempt to express some of the costs of a loan into a single interest rate. These 'costs' include the nominal interest
                             rate, some 'up-front' fees and on-going charges. It does not include fees and charges based on future events, which may not occur eg,
                             redraw fees, progress payments etc which are not typical of all loans. The aim of the comparison rate is to help consumers make a more
                             informed judgement of the costs of a loan, and in so doing, help them to compare various like loan products and services offered by the
                             various lending institutions. The Uniform Consumer Credit Code (UCCC) has been amended to require a 'Comparison Rate' to be quoted on
                             all advertising for home loans and personal loans where an interest rate is stated.
Contract of Sale:            An agreement in writing setting out the terms and conditions the vendor and purchaser enter into for the sale and purchase of a property.
Conveyance:                  The transfer of ownership of property from the vendor's name to the buyer's name.
Cooling Off Period:          Where applicable, it's the five day period after exchange of contracts during which time the contracts may be cancelled.
Council Rates:               An annual charge in relation to a property by the local council for the area where the property is located. The charge is to pay for local
                             council services.
Covenant:                    A requirement to adhere to certain terms, conditions or restrictions regarding a property.
Deed:                        A document recording an agreement, obligation or conveyance of property formally executed as required by law.
Default:                     Failure to meet a debt payment or other requirement of a contract by a due date.
Deposit:                     A deposit is normally paid by the buyer at the time of exchanging contracts or on "fall of the hammer" at auction. It is normally 10% of the
                             purchase price.
Depreciation:                When the value of the property decreases.
Easement:                    The right to use land belonging to someone else: e.g., rights of way, sewerage mains, etc.
Encumbrance:                 A charge on a property - i.e., mortgage or easement.
Equity:                      The amount of ownership you have in your property - i.e., the difference between what you owe and what it is currently worth.
Establishment Fees:          Fees charged to cover, or partially cover, a lender's costs in setting up a loan for a home buyer.
Exchange of Contracts        The Contract of Sale is prepared in duplicate usually by the seller’s solicitor or conveyancer. The original is signed by the seller and a copy
(Exchange):                  is forwarded to the buyer for signature. Once both copies are signed, contracts are exchanged and the buyer and seller each receive a copy
                             signed by the other. Then each party is legally bound proceed with the purchase of the property, subject to the terms of the Contract of Sale.
Exclusive Listing:           When you place your home for sale with only one Real Estate Agency.
Fittings:                    Goods or articles that can be removed from a property without causing damage to it - e.g., light fittings, curtains, blinds.
Fixtures:                    Items such as built-in cupboards, bath, toilet, stove, etc. that can't be removed.
Formal Loan Approval:        When the home lender formally approves your Loan Application and offers you a loan.
Free Standing:               A dwelling that stands independently of others.
Gazumping:                   If you make a verbal offer to purchase a home, the seller then exchanges contracts with another person because their offer is greater than
                             your offer.
Gross Income:                Total household income before tax.
Holding Deposit:             A small amount paid to the seller's agent to indicate your interest in the purchase of the seller’s property. It does not prevent the property
                             from being sold to other interested buyers.
Income Protection Insurance: Provides for a lump sum or periodical payment if a borrower becomes incapacitated and unable to continue working.
Interest:                    A charge for money lent.
Inventory:                   A list of items included with a property - i.e., furniture, moveable items, etc.
Investment:                  The purchase of an asset - for example, real estate - in order to produce income, or to produce capital gain on resale/maturity.
Joint Tenants:               The holding of property by two or more people in equal shares where, if one dies, his/her share goes to the survivor/s. Most couples buy
                             property under joint tenancy.
Land Subsidence Area:        An area where land movement is possible. Special council certificates can tell you whether a property is in a land subsidence area.
Liabilities:                 Outstanding debts appearing on your balance sheet.
Loan to valuation ratio:     The amount of the loan expressed as a percentage of the property's value.
Loan Pre-approval:           A letter your home lender provides which tells you how much they would lend you, based on the information you give them and some
                             terms and conditions that would apply if you borrowed that amount.

                                                                                 Page 5
Glossary of Terms continued.

Market Value:                   An estimate of the highest price a buyer would pay for a property.
Maturity:                       The date by which a debt or investment must be repaid/renegotiated in full.
Mortgage:                       A legal document which expresses the terms and conditions applying to a loan secured by real estate.
Mortgage Insurance:             Protects the home lender if they exercise their powers under the mortgage to sell the property for less than the outstanding amount left on
                                the loan secured by the mortgage.
Mortgagee:                      One who lends the money - e.g., the bank.
Mortgagor:                      The person who mortgages an asset to secure a loan.
Multiple Listing:               When a property is listed with more than one Real Estate Agent.
Negative Gearing:               When the money you make on your investment property (generally through rental income) is less than the cost of maintaining it (generally
                                or principally your loan repayments), and you are able to claim the loss as a tax deduction.
Net Income:                     Gross income less income tax.
Offers to Purchase:             A written offer of a specified price for a particular property. The offer may be conditional or unconditional.
Option to Buy:                  A legal document giving a person the right to buy. The document outlines the required price and applicable period, with a fee being
                                applicable. If the property is bought, the fee comes off the purchase price; if the purchase does not proceed, the fee is non-refundable.
Overcapitalise:                 When an amount spent on a property is more than the extra value (if any) added to the property as a result of the expenditure. For example,
                                where the cost of a bathroom renovation is greater than any increase in the market value of the property due to the renovation.
Passed In:                      A property is "passed in" at auction if the highest bid is less than the vendor's reserve price. The person making the highest bid has the first
                                option to negotiate further with the vendor.
Principal:                      The amount of money loaned by the lender. The interest is added to the principal.
Private Inspections:            Organised by the seller or seller's agent for buyer's to view the property.
Private Sale:                   The seller (vendor) does not engage a Real Estate Agent, but acts for him/herself, thereby avoiding a Real Estate Agent's commission.
Public Viewings:                When a home for sale is opened up to the public for inspection.
Refinancing:                    To replace or extend an existing loan with a loan from the same or another financial institution.
Repayment Redraw:               Reborrowing a payment you make in addition to your regular repayments on your home loan account.
Reserve Price:                  The minimum price to be accepted by the vendor at auction.
Search:                         The process of investigating title to land to ascertain if the vendor has the right to transfer ownership.
Secured Loan:                   A loan which is secured by a mortgage over your property.
Selling Price:                  The price to which the seller and the buyer agree on exchange of Contracts of Sale.
Settlement:                     The transaction that completes the sale. Moneys are handed over in exchange for relevant documents. The purchaser can then take legal
                                ownership of the property.
Sole Agency:                    One Real Estate Agent/Agency has exclusive rights to sell a property.
Stamp Duty:                     A State Government tax for the sale of real estate, calculated on the sale price. It also applies to the mortgage documents, and is calculated
                                on the amount borrowed.
Strata Inspection:              A certificate that will disclose information about the management committee of a Body Corporate, insurances, cost of levies and strata policies.
Strata Title:                   A form of title commonly used for units. It gives you membership of the Owners' Corporation, and the ownership of a defined part of the
                                whole building.
Successful Bid:                 The highest bid at auction, resulting in a sale of the property.
Survey:                         Shows boundaries of the land and location of the dwelling to ensure that there are no encroachments onto, or from, adjoining properties.
Tenancy:                        The right to occupy land or buildings as provided by the terms of a lease or other agreement.
Title:                          Is evidence of a person’s legal ownership of property.
Transfer:                       A document registered in the Land Titles Office which records the transfer of ownership from the vendor to the buyer.
Unencumbered:                   Describes a property free of mortgages, caveats or charges.
Valuation:                      A report written detailing a property's value.
Valuer (Property Valuer):       Determines the value of a property based on his/her knowledge of the area, property type and historical sales.
Vendor:                         A person who offers a property for sale.
Water Rates:                    The yearly water usage charge paid to the local water supply authority where the property is located (usually paid in quarterly instalments).
Zoning:                         Statutory description of the allowable uses of land as set out by local councils or planning authorities.

                                           Railways Credit Union
                 ...a different kind of banking with exceptional savings & loans

                        At Railways Credit Union we offer a range of home loans and
                        overdrafts to suit your financial needs. When considering buying
                        a home, don’t forget we have some of the best loan products
                        in Australia.
                        These include:
                        •   First Home Loans – with special benefits
                        •   Home Mortgage Loans
                        •   Investment Mortgage Loans
                        •   Mortgage Secured Overdrafts
                        •   Car Loans
                        •   Personal Loans
                        •   Unsecured Overdrafts

                        Phone 1300 362 216
                                                                                                                                                             PPS 0460-V1.0-0604
                                                                               Page 6

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