'Making an Offer' Procedure

[z611143]

Im looking to make an offer of a property very soon, probably next week.

I have a finance broker that doesnt get paid by me, but gets paid by certain banks where he gets the loan. Im not quite sure if i like this idea or not because he is almost working for his best interest rather than mine.

Im looking for a loan of <300k

Do i need a pre approval?

Can i go to certain banks and do it myself? (ie: Try and get the best deal).

Would probably look to go fixed 3-5 years to keep safe even though i dont see the rates really going anywhere.

Where can i look for the best loans/rates on one page? I remember seeing a link before that i will have to find.

What does dd mean? @HD_Ace said something about that in the contract.


Also if i get a loan from the bank im not with, can this be done? Or do i need to change over the bank. Currently with Commonwealth.

Thanks
Z6

 

[D.T.]

Im looking to make an offer of a property very soon, probably next week. Great!

I have a finance broker that doesnt get paid by me, but gets paid by certain banks where he gets the loan. Im not quite sure if i like this idea or not because he is almost working for his best interest rather than mine. All brokers work like this

Im looking for a loan of <300k cool

Do i need a pre approval? No, they're useless

Can i go to certain banks and do it myself? (ie: Try and get the best deal). You can, but they'll only look at that particular transaction. Benefit of a broker is they know your whole investing path

Would probably look to go fixed 3-5 years to keep safe even though i dont see the rates really going anywhere. OK, but plan ahead whether this loan would ever need to change, because then you'll be up for break fees. Again, your broker would be able to advise on this if they knew your whole path

Where can i look for the best loans/rates on one page? I remember seeing a link before that i will have to find. From a broker

What does dd mean? @HD_Ace said something about that in the contract. Due Diligence (as in researching)


Also if i get a loan from the bank im not with, can this be done? Or do i need to change over the bank. Currently with Commonwealth. Dont need to change banks, can still get loans with any (don't have to be with them to get loans)

Thanks
Z6

Answers in bold.

 

[LeoT]

What does dd mean? @HD_Ace said something about that in the contract.

Hi mate,

Just know that there are 2 types of DD (the difference can be subtle actually)

1. is general DD of an area eg growth drivers, vacancy rates etc
2. the other one is a DD clause in a contract that allows some time for further specific DD on the property. (usually there are DD clauses on development sites in order to secure a site fast and not get gazumped, giving you sometime to do more detailed research)


Cheers

Leo

 

[Redom]

Answers in bold.

DT covered it really well.

All brokers are paid by the banks - and generally don't charge the customer. They have access to the same bank products and get you the same rates etc (sometime better/worse, they negotiate the headline rates for you). Generally there's a few online cheapies (Ubank, loans.com.au) that brokers don't have access to though.

Just make sure that whatever loan product you go with suits your goals. E.g. if you're looking for equity releases down the track, pick a lender that suits.

Its not always about price, even if you're trying to save as much as possible - it can quite easily become more expensive over time and if poorly structured.

Also if your looking at purchasing a PPOR @ 90%, consider ING's latest no LMI deal - potential great saving.

Cheers,
Redom

 

[Redom]

Do i need a pre approval?

Regarding this part, its not necessary and too many of them can actually damage your credit file. Although to provide you some comfort, you should talk to a broker/bank to get their opinion on whether you're ok to borrow - they'll run the numbers and should give you a good feel for you're ability to borrow what you need.

Cheers,
Redom

 

[westminster]

Im looking to make an offer of a property very soon, probably next week.

I have a finance broker that doesnt get paid by me, but gets paid by certain banks where he gets the loan. Im not quite sure if i like this idea or not because he is almost working for his best interest rather than mine.

Im looking for a loan of <300k

Do i need a pre approval?

Can i go to certain banks and do it myself? (ie: Try and get the best deal).

Would probably look to go fixed 3-5 years to keep safe even though i dont see the rates really going anywhere.

Where can i look for the best loans/rates on one page? I remember seeing a link before that i will have to find.

What does dd mean? @HD_Ace said something about that in the contract.


Also if i get a loan from the bank im not with, can this be done? Or do i need to change over the bank. Currently with Commonwealth.

Thanks
Z6

Are you sure your ready?

Have you confirmed
- zoning of land
- what you can build on the land
- if retaining a house what requirements the Council has for improvements to the front house
- approx costings for front house improvements and new house
- approx costings for headworks (sewer and power), earthworks, strataing
- how much profit is in it
- what structure will you use and how will that affect the gross profit you have calculated

When you know all that you need to decide what Subject To clauses you want to use on the Offer.

They may be
- subject to finance
- subject to building and pest inspection
- subject to due diligence (this give you x many working days to conduct extra homework on the house but it is off the market)
- Subject to early possession prior to Settlement (if you want to do any work and the Seller is willing)

Consider
- length of time to get finance at this time of year (it may pay to give yourself extra time and more than 21/28 days normally stated)
- length of settlement time post finance - the longer the better. Normally is 28 days.
- when writing contracts in December it may be best to use dates instead of days because there are many public holidays.

 

[Jamie M]

Hiya OP

Brokers get paid a commission for introducing your business. If you go direct to the bank - the banker gets paid a salary. Either way - someone, somewhere is getting paid.

Most commissions are the same across lenders - and any broker pushing a lender that pays a higher commission won't last too long in the industry.

Be careful with fixing for too long - break costs can be expensive and your plans may change within 3 - 5 years. If you're keen on fixing - and don't have another mortgage, consider keeping a chunk of the loan variable so you can take advantage of flexible features such as an offset.

A link to the "best loans" sounds like a dangerous approach. What constitutes best? Lowest rate? If so - google "cheapest rate" and you'll find heaps of options - ubank and loans are among the cheapest.

DD means due diligence or darling daughter depending on the forum

You can get a loan with any lender you qualify with.

Cheers

Jamie

 

[z611143]

Thanks heaps guys

Really helpful

 

[z611143]

Are you sure your ready?

Have you confirmed
- zoning of land
- what you can build on the land
- if retaining a house what requirements the Council has for improvements to the front house
- approx costings for front house improvements and new house
- approx costings for headworks (sewer and power), earthworks, strataing
- how much profit is in it
- what structure will you use and how will that affect the gross profit you have calculated

When you know all that you need to decide what Subject To clauses you want to use on the Offer.

They may be
- subject to finance
- subject to building and pest inspection
- subject to due diligence (this give you x many working days to conduct extra homework on the house but it is off the market)
- Subject to early possession prior to Settlement (if you want to do any work and the Seller is willing)

Consider
- length of time to get finance at this time of year (it may pay to give yourself extra time and more than 21/28 days normally stated)
- length of settlement time post finance - the longer the better. Normally is 28 days.
- when writing contracts in December it may be best to use dates instead of days because there are many public holidays.

Yeh so im going into speak with town planner/council monday.

Ive already spoke to water cooperation in regards to water/sewerage ect

I wont be building anytime soon.

If low offer is accepted then it will be close to positive geared property once rented. Had a rental appraisal.

Will see finance broker again soon

 

[perthguy]

Just to let you know that I have refinanced all my loans twice now with the same broker: one 3 years ago and currently doing the same. Long story as to why but the bottom line is that both times my mortgage broker got much better deals than I could find. I can confirm that he has worked very hard to find deals that suit exactly what I am trying to do and does not just present deals where he gets the most out of it.

 

[HD_ACE]

What does dd mean? @HD_Ace said something about that in the contract.
Z6

This is what I was referring to below.

2. the other one is a DD clause in a contract that allows some time for further specific DD on the property. (usually there are DD clauses on development sites in order to secure a site fast and not get gazumped, giving you sometime to do more detailed research)


Cheers

Leo

 

[z611143]

Can i place an offer via email or does it have to be by phone?

 

[thatbum]

Can i place an offer via email or does it have to be by phone?

None of the above. In WA its generally done on the standard O&A paperwork with joint form of general conditions.

 

[perthguy]

None of the above. In WA its generally done on the standard O&A paperwork with joint form of general conditions.

That's true for a formal offer but you can negotiate in person, by email or by phone. I have done all three. I'm kind of negotiating on a block at the moment by email.

 

[Big Will]

Things are different in the west lol.

I wouldn't entertain your negotiating unless it was a formal offer.

 

[perthguy]

Things are different in the west lol.
I wouldn't entertain your negotiating unless it was a formal offer.

This round of negotiaion was initiated by the real estate agent, so things must be different in the west. This is the second time too. First was by phone. In both cases the real estate agents could not resist negotiating and I can't resist responding. I was only ever semi serious on both properties. If I was serious, I would put in a written offer of course.

 

[Ed Barton]

I have a finance broker that doesnt get paid by me, but gets paid by certain banks where he gets the loan. Im not quite sure if i like this idea or not because he is almost working for his best interest rather than mine.

Long term his and your interests are the same. Don't go to a pimply faced 19yr old broker.