Buying Property

Buying property was a confusing process for me – so, I wanted to share my learning, centralise the steps that take you from start to finish and publish the tools I made and used to guide my decision-making.

I also felt a connection with a speech delivered by Treasurer Josh Frydenberg, announcing the release of the Royal Commission into Financial Services Final Report at a Press Conference outside Parliament House on Feb 4 2019:

"Let me be clear, personal responsibility for financial decisions rests with those who make them." Full transcript here.

The decisions you make are your own responsibility, and whilst the banks could do (a lot) more to make their products clearer, support buyers in making good decisions by providing better advice, they might not - and that's why I want to help.

I've spent a lot of time creating the tools, together with this information. If it saves you time on your quest to buying property - consider donating to me via this link, or at the bottom of any page.

Disclaimer

Whilst I've taken care to ensure the information provided, and the tools I've built are accurate, all information is provided as-is. In no event am I liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.

The information on this website, as well as the downloadable content are subject to my terms of use.

Background

When I started looking for a loan, before calling anyone or doing anything - my expectations were:

• I would be asked a series of questions, to ensure the loan was right for me.

• I would come prepared, to make the process as efficient as possible, but assumed there would be things I had not considered, given I did not consider myself an expert.

• I would find all the information I would need in one place.

Completing the 'pre-approval' process with several banks, I wasn't asked anything I didn't already have an answer to - and that made me nervous.

At the time, having never had a loan of any kind before, I couldn’t identify why their basic questions and accepted answers were inadequate – but in retrospect, I'd sum it up as follows:

• Current Expenses – Banks wanted to know my spending across different categories - Different banks had different categorisations - some wanted the answers in a spreadsheet, some wanted it verbally over the phone. All the banks I spoke to were willing to rely on what I said - But none of them tried to quantify how ‘sure’ I was.

e.g

Over what period had I made the estimates?

Did I typically exceed the estimates?

Were there any significant expenses their categories hadn't captured?

etc

The banks offered no cross-checks to validate my expenses against, or suggestions to better track my expenses.

• Future Expenses – None of the banks I spoke to considered the type of property I was interested in – sure, they asked for a suburb, unit? townhouse? freestanding? But this left much to the imagination:

e.g)

Was the house I would accept 'as good as new'? Or did it need to be torn down? The difference here obviously influences my ability to make repayments - and the costs are an unknown to me

• Banks (perhaps deliberately) are not helpful at explaining their own product features

  • If interest rates rise by x% - can I still meet repayments? How much would that impact my lifestyle?

  • If I pay a $300 yearly fee to get an offset account – How much would need to go into that account per month for it to pay for itself?

  • What benefit is there to me to use an offset account vs a redraw facility? Why do 2 lenders with very similar facilities have substantially different comparison rates?

My pre-approval results were suggesting the maximum loan value I could be given was significantly higher than what I expected it to be, or would be comfortable with ($250,000 higher). The Banks had no way of explaining the data points that made up their maximum loan value - so how could I rely on it?

No brokers I saw assisted with the above in any way beyond what the banks did.

The loan application is a big part of buying property – but it’s not the only part, and banks / brokers do not assist with the other pieces, despite the fact these things are mutually inclusive.

So, with those issues in mind, I wanted to capture the end-to-end process, and share the tools I used to guide my decision-making.

My hope is that you will gain 4 things from this site (in order):

1. Information about the process itself (and the order you should approach it)

2. Information about terminology banks use that you'll have to get familiar with

3. Answers to the questions you have

4. Tools to help you make decisions

The process, the whole process, and nothing but the process.

If this is your first time here: Don't panic, you've probably noticed this page is quite long, with a hefty looking scroll bar that you're only about 20% through.

This structure is intentional. When I was researching, I found myself following link after link on different websites. I had a lot of questions, and I'd try to answer those questions in the order I thought the process occurred in - reading an answer then leads me to another question. But no matter how many questions I had, or answers I read, I never felt I clearly understood the process itself.

Please do a first-pass of reading on this page before clicking-through to answering any questions - as the answers may involve content you haven't read yet.

This page specifically avoids using any banking terminology - it's a strictly entry-level, conversational overview to the end-to-end process.

After you've read this page, you'll want to:

See this page to start building your repertoire of banking terminology. That page poses many questions you can follow-up after you've read it.

See this page, which addresses all the questions I had myself or heard from others.

See this page of tools to help you make decisions - which contains expense tracking, serviceability calculators and inspection score sheets.

I strongly recommend you skip those pages for now, as they are not key to understanding the overall process.

I chose not to number the steps - since technically speaking - all of the steps prior to signing a Contract of Sale can happen in any order - I've placed them in the order they are in as I believe this best facilitates good decision-making.

Having said that, I don't mind telling you there's 15 steps by my count. Realistically, there's only 2 steps that take more than a few hours.

Below is a timeline of how someone buying property (who has read this website) might play out.

The key here is that the pre-work happens before you buy, you go in knowing the steps, and can quickly act. Without the pre-work, trying to settle a loan in 30 days would be extremely stressful.