���������������

So you’ve decided it’s time. You’re going to buy your first home and it probably feels a little

daunting, right? After all everyone has probably been telling you that buying a home is

one of the largest purchases you will ever make and that it’s an investment in your future,

so it’s pretty important you get it right.

Well, it doesn’t need to be so scary, especially if you have the right information at your

fingertips. Which is why we have developed this guide to buying your first block of land

and building your home. So, first things first…

Doing your sums To save your heart being broken from the outset, it’s probably best to do some basic sums first so that you know where you stand. There’s no point in finding a perfect block of land and then discovering that you can’t afford to buy it.

Our budget planner is a useful tool (check it out under our Finance section). Basically, how much you can borrow towards your new home will depend on lots of things, such as how much you earn, the income of the people that you may be buying the property with and how much you spend each month on other commitments such as car loans, personal loans, credit cards and living expenses etc. The first step in getting a mortgage is to do a budget, so you get a clear picture of where you stand financially. This will give you a feel for how much you can afford in mortgage repayments. Note that many land developers, including LWP, now require you to get a pre-approval letter from your chosen financial institution, so doing your budget early is a great move.

Buying solo or with someone An increasing trend is for people to buy joint property by pooling their resources with friends, family or compatible acquaintances. The main benefit of buying a property jointly is it can help you afford to enter the property market. If you are looking to purchase your property with another person, make sure you consider the following:

Will you register your property as Joint Tenants or Tenants in common?

It is important to understand that these options have different legal ramifications for each borrower against the loan.

Top Tips for buying land

Understand your financial limits Talk with your bank or finance broker and secure a pre-approval letter from a finance institution.

Understand your property criteria and do your research It will help if you have a clear view on criteria such as preferred location, (e.g. close to family, employment, public transport), lot size, etc. With your financial capacity understood and property criteria established you are equipped to undertake very meaningful research.

Choose quality More than ever real estate is a long-term investment with short-term windfalls unlikely. Choose a lot that meets your criteria and has sound long-term investment potential. History shows that master planned communities with a comprehensive program for facilities and services outperform the ad-hoc subdivisions. Perth is fortunate to have the best selection of master planning communities in Australia.

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

The Big Purchase: An introductory checklist

Can you still get a First Home Owner Grant if jointly buying a property with someone else?

When buying a property with someone else, you will still be able to get the First Home Owner Grant if all co-buyers who will be named on the title of the property are eligible to receive the First Home Owner Grant. For the most up to date information visit www.osr.wa.gov.au.

Where to look and what to look for? Once you have decided who you are buying with and how much you can afford to spend, the next basic step is getting an idea of where you might like to purchase and doing your research.

It is useful to sit down and write a list of “must-haves” and “would likes”. Think in terms of facilities, access to public transport, proximity to family and friends, lot size, and so on. In our section on “The Big Decision” we have included a couple of useful checklists to help you compare different land estates.

When you’ve made a list of the areas where you think you’d like to live, allocate time to go and visit them. See what’s out there on the ground, have a drive around established parts of developments to get an idea of what the new areas will look like once established. Call into the land sales office and get any extra information that you may need and the latest availability and price lists.

While you’re out visiting, call into display homes – many estates have them and they’ll show the latest trends in house design. The Builders’ Sales Consultants will be able to help you weigh up what houses in their range will fit your favorite homesites.

So you’ve deci

daunting, righ

one of the la

so it’s pretty

Well, it doe

fingertips

and build

Doing youTo save your

bly

���������������

Deposits, mortgages and banks: it can be the toughest thing for first time buyers to get

their heads around. However, getting your first home loan does not need to be as difficult

as you think.

Today’s lenders require full disclosure of your financial position to ensure that you are able to service mortgage debt. They put your complete financial history under the microscope and things like HECs/HELP debts; personal loans, credit card repayment history and savings etc will all be checked out before they say ‘yes ‘ or ‘no’ to your application.

Your credit rating (obtained through a credit agency) is one of the biggest determinants of whether or not a bank will offer a home loan. You can get a copy of your credit rating by visiting mycreditfile.com.au. Knowing about any issues upfront allows you to discuss and explain them with your financier before making an application.

WORKING OUT HOW MUCH YOU MIGHT BE ABLE TO BORROW » Check bank websites for borrowing calculators.

They can be useful to give you a rough guide on what you might be able to borrow.

» You’ll usually require a 5% deposit of the property’s value – the more the better. Generally the more you have saved, the more loan options available to you.

» Unless you have saved up more than 20% of the loan amount needed then you will need to budget for mortgage insurance (it protects the bank in case you can’t make repayments for any reason).

» Transfer Duty (a government tax) is not applicable on property purchased by First Home Buyers if the land component of the house and land purchased is less than $300,000 (if not, First Home Buyers should refer to www.osr.wa.gov.au in order to calculate their transfer duty liability).

» Budget for a number of fees – registering mortgage documents, cost of title searches, settlement agent’s fee and bank loan application fee to name a few.

BANK VERSUS NON-BANK FINANCIAL INSTITUTIONS (Major vs 2nd Tier)Generally speaking, there is very little difference in the home loan products offered by banks compared to non-banks (eg building societies). Some may argue that non-banks offer a greater degree of personal service due to their smaller client base but even this distinction doesn’t hold the same level of truth it once did.

As with any financial product, you should never accept the first deal you are offered. You are more likely to find a mortgage that suits you by approaching a range of lenders.

Did you know? » You usually just require a

5% deposit, not the 20% that many people think. However if your deposit is less than 20% remember you will be required to take out mortgage insurance.

» If the land component of your house and land package is under $300,000 then you won’t need to pay any stamp duty, which is a great saving!

» When purchasing your first home, it is worth considering the services of a mortgage broker to guide you through the process. Many people think this service costs you money, but it doesn’t!

» For the most up to date information about the First Home Owners Grant and Transfer Duty, please visit www.osr.wa.gov.au.

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

Finance 101: Borrowings, Brokers and Banks

WHAT DOES A MORTGAGE BROKER DO?A mortgage broker can answer any questions you may have about mortgages, help you to find the best deal to suit your needs and warn you about hidden costs.

If you choose to use a mortgage broker, they will act as an intermediary between you and the lender. A mortgage broker will: » Identify your needs and analyse your current

financial position » Identify lending options that suit your needs » Negotiate on your behalf with the lending

institutions » Organise finance pre-approval » Arrange all necessary documentation in order

to finalise a mortgage for you.

The benefits of using a broker are considerable. Generally, there is no charge to you in using a broker. Great deal! A broker is paid directly through commissions from the lending institutions on settlement of your home.

A mortgage broker has the expertise and considerable market knowledge to be able to provide advice on the benefits and structure of many different mortgage options. This not only improves your chance of selecting the right loan for you, it also saves you time!

A final note, make sure that do your homework when it comes to selecting the right broker. West Australian brokers are licensed and must be a certified mortgage consultant through the Mortgage Association of Australia (MFAA). It always best to ensure you have the right person working for you.

Deposits, mort

their heads ar

as you think.

Today’s lendservice morthings like all be chec

Your credof whetvisitingexplai

���������������

FINANCE PRE-APPROVAL So what is a pre-approval anyway? It’s an indication from a lender that you meet their basic criteria for a loan up to a specified amount, and provides comfort to you that you can obtain finance once you find the right property. Pre-approval is similar to full finance approval however the difference is that, at this stage, you may not have decided which property to purchase.

Why would you get it? It’s helpful when you’re going to look for a block of land or a house and land package to know how much you can spend based on your current income level. Also, when you’ve chosen, it should be a quicker process to get full financial approval. Additionally, most land developers request a pre-approval these days before securing your block of land.

How long does it take to get it? Usually 24 - 48 hours (if you have all the info the lender needs to evaluate you).

What do you need to do to get it? You will need to complete a home loan application form and include relevant documentation. Your finance broker or bank representative will guide you through this process.

Before giving you pre-approval, most lenders require you to provide them with documentation that substantiates your identity and your ability to repay the loan.

This includes: » proof of identification » proof of income » proof of residence » proof of current assets and liabilities » proof of other assets (not held with that

lending institution) » proof of savings/deposit for your purchase

Top Tips » Be organised. Compile your

documentation as soon as possible to speed up the process of approvals.

» The two most important factors for the lender are SERVICEABILITY and EQUITY — what is your financial ability to repay the debt and what is the value of the property you want to buy. It is important to understand this up front.

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

Finance 102: Pre-approvals

Once you have received your pre-approval, the lender will issue you with a certificate verifying that your finance has been pre-approved for a specific length of time. The amount you will qualify for will depend on your financial situation as well as the lender’s criteria.

In order for pre-approval to proceed to full financial approval, in addition to information provided for pre-approval, you will also need the following: » The provision of a contract of sale for the

purchase of the land » Any other information the lender may request » A copy of the fixed price building contract and

plans/specifications of the property you intend to construct

What is it not? A pre-approval for finance IS NOT a guarantee that you will get finance, it is an evaluation of information that you have supplied, that suggests you are capable of repaying a loan of a certain amount.

NOTE: » Not all pre-approvals are the same » They are conditional to the terms and

conditions of the bank providing the pre approval

» A pre-approval is usually valid for between 60 and 90 days

FINANCE PRE-So what is a pre-aIt’s an indicationtheir basic criteamount, and pyou can obtaiproperty. Preapproval ho

ou m

���������������

FINANCIAL APPROVALWhat is it?The following documents will be required by your financial institution or broker in order to obtain finance approval. This documentation should be compiled and presented to them as soon as possible to speed up the approval process. » Proof of Income – If you have been in the same

job for six months or more (or two years in the same industry), copies of the payslips you have received in the last six months showing your name, year to date earnings and name of employer on them; if less than six months, you will also need to provide the same documents from employment prior to current. Also you will need to confirm employment status – full time, part time, casual or self employed.

» Evidence of any other income (rental income, share dividends etc)

» If you are self employed, you will need to provide the most recent two years’ financial statements and your accountant’s name and contact details.

» If your deposit is a gift, a statutory declaration advising that it is a gift and does not need to be repaid will be required from the person gifting the money. Gifted money will need to be in your savings account for a minimum of three months.

» Credit card and personal Loans – latest statements for any current debt that demonstrate your repayment.

» Evidence of any other personal debt. » Previous two years’ tax returns

Other questions they will ask are? » Have you owned property before? » Are you a permanent resident or Australian

Citizen? » Are you currently on probation as part of your

employment?Did you know? » Finance pre-approval is

required by many developers and builders now. It usually only takes 24-48 hours to get, so it’s not as difficult as you might think.

» Pre-approval is only valid for between 60 and 90 days usually.

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

Finance 103: Approvals

» Have you been in the same industry for two years?

» Have you ever had any problems with your credit history? If so, be prepared with how you have resolved problems. Defaults with credit cards, mobile phone accounts and service providers (eg Alinta, Synergy) will impact on your credit history.

» Do your parents have an investment property? » Do you think they would be prepared to help

you? Consider getting a personal guarantee from your parents — by providing a limited liability mortgage over their property.

The two most important factors for the lender are SERVICEABILITY and EQUITY — what is your financial ability to repay the debt and what is the value of the property you want to buy.

PROVING WHO YOU AREYou will need to be able to prove who you are in order to obtain a home loan. You will need:One primary photographic identification document — current passport, current Australian driver’s licence (with photo), current Australian Government issued Proof of Age card or international travel document (having same characteristics as a passport)Or One primary non-photographic identification document – birth certificate, birth certificate extract, citizenship certificate, current Australian benefits card, together with one secondary identification document – current international driver’s licence, current foreign driver’s licence, Australian Taxation Office notice, current interim Australian driver’s licence, current Australian learner’s permit, current rating authority bill, public utility (phone, electricity or gas) record less than three months old, or an Australian bank statement less than three months old.

FINANCIAL APWhat is it?The following dyour financial iobtain financeshould be coas soon as p

���������������

House and Land PackagesHouse and land packages are available in land estates all across WA and are a fantastic option for first time buyers. These make the process of buying land and building your first home as simple as possible.

So what are the pros and cons of a house and land package?

PROs: » Buying a house and land package can be a

great way of buying your first home. You can save a lot of time and often the process of buying a house and land package is easier than building from scratch.

» Despite common misconceptions, you can usually physically see the land that the house is going to be built on and view the display home that comes with the package. So you will know exactly what it is you are buying!

CONs: » Usually when you purchase a house and

land package you will have certain house designs available that have been designed for certain lots. There is often not much option to substantially change your house designs with a house and land package.

» Not all lots available in an estate will have house and land packages available. It may just be restricted to certain areas or lots.

Top TipsWhat you need to consider if you are choosing your land and home design separately: » It’s wise to consider the type

of home you think you want before buying land — i.e. a big single story home will require a particular size block of land compared to a narrow double storey which will not require as much ground area.

» Consider showing a few builders the block you are looking at and the type of home you expect to build, as they will be able to give you an indication of whether the house design is suitable for the land. Some blocks only suit certain shaped homes. You need to consider:

Which side of the block the driveway is locatedWhich side of the block the living room windows will faceAny special “building envelopes” on the block that limit where the home must be placed on the landWhere North is in regards to the block (the sun rises in the East and sets in the West and in winter takes a Northerly aspect)What the width of the home is compared to the width of the landWhether you have any special requirements, in terms of the space you will require at the front or rear of the propertyWhether you want a big back yard, and enjoy gardening, or you’re better off with a low maintenance block, but close to parks and walking paths

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

House and Land Packages vs Buying Land & Building

Buying Land and Finding a Design/BuilderThe other way of building your new home is by purchasing a block of land and choosing a suitable home to build on it as separate processes. This might involve going to a developer of a land estate, picking your land and then finding your dream home to put on it with a builder.

So what are the pros and cons of this approach?

PROs: » You have the flexibility of holding the land

for a period of time before constructing your home. This might give you time to secure your land and then save more money for your dream home design. (Note, many developers – including LWP Property Group — require you to commence building within two years of settlement)

» You can choose an individual design on any lot you choose (providing it fits on the land of course). This means you are not tied in to a particular house design on a particular block.

CONs: » The process might be more complicated. Often

a house and land package makes it seamless in that the developer and builder are working together.

What you need to consider if you are choosing your land and

design separately:sider the type

nt

Ho

���������������

There can be a minefield of new terms that you face when you are buying your first home. From

Assets to Variable Rates we have it covered in our A-Z (well A-V!) guide of all things real estate.

Assets: Any money, property, goods or other items of economic value that you own.

Contract of sale: Written agreement outlining the terms and conditions of a property sale.

Contract acceptance: the process where the buyer and the seller enter a binding contract by each signing the contract. The contract date is the date of the final signature on the contract.

Conveyancing: Legal process of transferring ownership of a property from one person to another.

Deposit: Usually 10 percent of the purchase price of a property used to indicate an intention to buy. It is non-refundable after a contract becomes unconditional. When buying land from LWP, we require a deposit of $1,000.

Default: When you fail to make agreed payments — this can apply to a mortgage or to a contract.

Draw down: Access available funds.

Early repayment fees: Fees that may be payable when a loan is repaid before the end of its term.

Easements: A right held by someone to use land belonging to someone else for a specific purpose. For example, mains, drains and water pipes are usually covered by an easement.

Establishment fees: Fees charged by a lender for setting up a loan.

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

Real Estate Terms Explained, Part 1: A-L

Fixed rate: An interest rate that does not alter, regardless of any variations in the market’s interest rates, for the fixed term.

Honeymoon period: Where the interest rate is lower than the standard rate for a period (usually 6 to 12 months) when a new loan is started.

Interest only loans: A repayment option in which, during a specified term, only the interest accrued on the home loan is paid. This normally reverts to Principal and Interest repayments at the end of the Interest Only term.

Investment property: A property that the owner does not live in. A property purchased for earning a return on investment.

Joint tenants: Joint tenancy is the equal holding of property by two or more people and incorporates a right of survivorship. When one party dies, his/her share goes automatically to the other partner(s).

Leveraging: Using an asset as security for borrowing.

Liabilities: Your outstanding debts or what you owe.

Line of credit loan: A revolving line of credit, lending a specified amount and allowing that amount to be borrowed again once it has been repaid.

There can be a minefi

Assets to Variable R

Assets: Any monitems of econom

Contract of sa

the terms and

ct ac

���������������

There can be a minefield of new terms that you face when you are buying your first home. From

Assets to Variable Rates we have it covered in our A-Z (well A-V!) guide of all things real estate.

Mortgagee: One who lends money and takes a mortgage over the property of the borrower or a guarantor.

Mortgagor: One who borrows money and gives a mortgage to the lender.

Portable loan: A loan that enables the borrower to move properties without having to refinance, subject to credit approval.

Principal: The actual amount of money that has been borrowed to buy a property.

Principal and Interest repayments: A repayment option in which both the amount borrowed and the interest accrued on that amount are repaid over an agreed term.

Private sale: The owner of a property does not appoint a real estate agent to sell their property.

Redraw facility: A facility that allows additional repayments made on a loan to be accessed, or drawn on by the borrower, at any time.

Security: Any mortgage, charge or other rights given as security for the performance of an obligation (including the payment of money).

Seller: Person selling a property.

Settlement: Completion of a sale when the balance of the contract price is paid to the seller and the buyer becomes legally entitled to take possession of the property.

This guide has been put together by LWP Property Group to give general advice about the process of buying land and building a house on it. All advice is only general in nature and it is advised to always seek additional professional advice.

Real Estate Terms Explained, Part 2: M-Z

Stamp duty: A state government tax paid on the purchase of properties. It is determined by the sale value and varies between states/territories.

Tenants in common: A type of co-ownership where two or more people own distinct interests (which may be equal or unequal) in the same piece of property. When one party dies, their share of the property can be left to beneficiaries other than their co-owners, as stated in their will.

Title deeds: Set of documents containing information on the present and past ownership of a property. Details names of owners and institutions that have registered a charge against the property.

Title search: The process of investigating title to land to check that the seller has the right to transfer ownership. A title search provides the names of the owners and other details of the property such as a restrictive covenant, mortgage or caveat on the title.

Transfer: A document that needs to be registered with the relevant land titles office so that the change in ownership is recorded on the certificate of title.

Variable rate: An interest rate that may rise and fall, in conjunction with variations in the market’s interest rates.

There can be a minefi

Assets to Variable R

Mortgagee: Onemortgage over tguarantor.

Mortgagor: Oa mortgage t