Buying a house made simple

Why rent? When you don’t have to!

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Buying a house when you’re a migrant

Moving country is always a difficult time. You may have left loved ones behind and even your own family may be following on later while you try to find a home to settle in.

 

When you move to Australia you tend to lose your credit history and have to start over again. If you had good credit before then it’s a pain since you have to start all over again, although if you had bad credit it gives you a chance to start from fresh.

 

Since most migrants have no credit history when you move to Australia the banks don’t particularly like lending you money (and we know this from experience). They will either charge you higher rates, bigger deposits (the standard is 20%) or won’t lend to you at all unless you have a very good job.

 

There is also the Foreign Investment Review Board (FIRB) to consider. This Board examines all application to buy real estate by foreign people and companies. At the time of writing temporary residents are allowed to buy one residence as their home (not for investment purposes) and approval is usually granted as long as you sell the property when you leave the country permanently.

 

FIRB approval is only required when there is an unconditional contract of sale so only when the decision to buy has been taken.

 

So if a you’ve just moved to Australia and you want to buy a place but can’t get bank finance does that mean that they have to rent forever? No it doesn’t since there are other ways to buy a house other than using bank finance. One way is a process called ‘rent to buy’ or it can be known as ‘try before you buy’.

 

As a new migrant you should only buy if you really know that you want to settle in Australia. We know that may seem obvious but some migrants only come here for a couple of years for work and know that they will be leaving after that. If you are on a temporary visa, as the legislation stands at present you will need to sell your home when you leave permanently and since you don’t know what they price of your property will be then it may not be the right time to sell for you.

 

The ‘rent to buy’ consists of two parts – the rental agreement and the option agreement. The rental agreement is simply a residential tenancy agreement and anyone who has rented before will know the basics of one of those. The option agreement (or Deed of Option) is the right to buy the property by an agreed date for a fixed amount.  Since you have the right but not the obligation to buy you do not have to apply for FIRB approval at that stage.  Only when you have taken the decision to buy the property do you actually have to apply for FIRB approval.

 

For further details about the advantages about rent to buy please sign up for our free report.

 

For up to date information on the FIRB please visit their website at http://www.firb.gov.au/content/default.asp.

Steps to buying a house

Okay we did exaggerate before when we said that there are a million steps to the house buying process but the usual steps to buying a house are:

  • research an area
  • save deposit (20% is required by most banks)
  • find a financial institution that may lend you some money
  • start looking at houses
  • choose a property
  • check condition of property
  • formally complete loan application
  • wait for loan approval
  • perform legal checks
  • exchange contracts
  • plan to move
  • settlement and move in

Where do a lot of people get stuffed? Either saving for the 20% deposit or getting finance from the bank (or other financial institution).

 

Did you know that you can buy a house without a 20% deposit?

 

Did you know that you can buy a house like you can buy a sofa from radio rentals or the same way you can lease a car?

 

If you’re thinking why haven’t you heard about this before, it’s because it’s been forgotten about since most of Sydney was originally bought and sold this way.

 

This is not new.

 

These ways of buying and selling property were created when the banks weren’t lending much money to anyone.  Yep that may sound familiar since the same thing is happening now.

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