After months of househunting, you’ve found your ideal home or investment property. When auction day is approaching, it’s time to get serious about preparing to bid.
Here’s a checklist of five essential things to do before putting up your hand at auction.
1. Secure your finance
If you’re serious about a property, you’ll bid more confidently if you have pre-approval on a home loan. Your mortgage broker is the perfect place to start.
Your broker will work with you to decide which loan suits your needs. Will you lock in a fixed interest loan or a variable one? Maybe a combination of both? Ask lots of questions so you are well informed. Also, if you’re a first home owner, investigate the current government grants available to you.
2. Building and pest inspections
The home you’ve fallen in love with may look beautiful, but you want to make sure it’s structurally sound. A house is likely to be the biggest investment you’ll ever make in your lifetime. If you discover any expensive defects during a building inspection, it could save you thousands of dollars in the long run. Both building and pest inspections should be carried out by qualified tradespeople.
3. Get the contract of sale – and read the fine print
The contract of sale contains all the legal information about the property, such as the title,
boundary measurements and recent building works. You’ll also find information about rates, local government building restrictions and easements (if any). A copy of the contract is usually available at open for inspections and you can request a copy from the real estate agent. Read it thoroughly before auction day. It’s also a good idea to get your conveyancer or lawyer to check it.
4. Set your budget
Your broker or lender may have provided you with pre-approval for the amount you can borrow, but there are other costs to consider. These include:
• loan application fees
• building inspection fee
• mortgage insurance
• government fees such as stamp duty (this differs in every state and territory so check the government websites)
• solicitor or conveyancing fees.
For budgeting purposes, it’s a good idea to calculate your fortnightly or monthly loan repayments based on an amount two per cent above the current rate, to allow for possible rate rises.
5. Register with your agent
Some agents will require you to register as a bidder, or at least advise that you’re interested. A quick chat with the agent in the week preceding the auction, or on auction day, should be enough. If you’re not comfortable bidding, you could ask a friend or family member to bid for you – just make sure they know your limit.
Auctions can be intimidating, but don’t be afraid of the competition. If you’re prepared, you’ll bid with confidence.
Your mortgage broker is an excellent source of information and assistance in the lead-up to an auction, even beyond financial preparation. Contact your broker today to get things moving.