Unbeknownst to many, I have been pursuing a dream of owning a property for the past 6 months. After more than 10 years of living in rental units, going through numerous occasions of moving in and out of properties, I have decided to stop this vicious cycle. Unfortunately, there is only one option available to me – get my own place. Guess what? Easier said than done! Buying a property is not the same as buying clothes, bags or pairs of shoes – all of which I consider myself expert at. I discovered that there were a lot of things I needed to consider.
From start to finish, this life-changing event was peppered with excitement, frustration, fear, tears and relief. People, who went through the same journey, warned me but it is totally different when you’re experiencing it first-hand. Now that I’m a proud property-owner, let me share with you a detailed account of what I have been through:
1. Producing a ‘substantial’ deposit. If there’s something I am not good at, it is saving money. And when we talk of ‘deposit’ we are talking about serious money. Thanks to my mum because she volunteered to help me! Luckily, our current economic situation has affected the housing market which prompted a number of financial institutions to offer low-docs/low-deposit home loan products to compete. There’s a catch! If the deposit is between 5% – 15% of the value of the property, lenders hit you with LMI (Loan Mortgage Insurance)! Add this to the list of the other fees I have to pay!!!
2. Choosing between a house and a unit. I am not a fan of houses – too much maintenance! My innate ability to murder plants means that a garden would be a wasted space. A unit is more appealing to me – less maintenance, very urbane. In terms of size, I am only after a space bigger than the unit I am currently leasing. Not too big, though – just big enough to accommodate my collection of clothes, bags and shoes. Another consideration when it comes to the type of property was the available amenities and facilities. I have seen a lot of residential buildings that offer plenty of amenities – lifts, pool, spa, rooftop, barbeque area. While very enticing, they come at a cost called Strata Levies! So the more amenities it offers, the higher the fees you have to deal with.
3. Locating the location! I would love to be where I am now – so close to the city – but realistically, I wouldn’t be able to afford the price tag attached to a place with the space I require! I heard a lot of good things about Alexandria so I decided to look in the area. It’s very promising, not too far from the city and in terms of transportation, trains and buses are easily accessible.
4. Getting the lender’s (pre)approval. Ok, this would be the most important thing you need before you even start inspecting properties. Without it is like going to a war without any ammunition. The lender assessed my financials and provided me with an idea of how much I can borrow. And because I have already given them all the required documents, I didn’t have to do this all over again (unless things have changed). Getting one didn’t come easy even though I currently work for a bank. For ridiculous reasons (no point discussing it in here!), I ended up getting my loan from another bank.
5. Inspecting the properties. This has been one of the most challenging aspects because the unit I’m leasing, at the moment, is also up for sale. The agency handling it scheduled the inspections to occur every Saturday at 10am, which seemed to be the most popular timeslot for all real estate agents to show their wares. Luckily, when I saw (and fell in love with) the property I bought, my unit was in the process of changing agents (after 4 months on the market, this was expected) so the inspection for that weekend was cancelled.
Allocating the whole day for inspection and trying to see as many properties as possible proved to be fruitful. And because Saturday is like a ‘Market day’, I saw properties for sale in the same area (or even building!) that were not advertised in Domain or Real Estate websites. When inspecting, I found it very helpful to have a friend with me to do this demanding task. Aside from having two perspectives when discussing about a certain property, you also have the added benefit of being reminded of something that you might have forgotten. Plus, your friend can act as your chauffeur! All in all, I only spent 3 Saturdays inspecting properties – not bad for a starter.
6. Making an offer. Whether the property you’re looking at is through private treaty or via auction, I learned that you should always put in an offer ‘conservatively’. Since I knew from the start how much I could borrow, I had a fairly good idea of the amount I could put forward. Besides, any value below the pre-approved loan amount would always be good for me!
In total, I made two offers. I put in an offer to one property in Botany Road, which I inspected on 29 October. After going back and forth with the agent, I was told that I didn’t get it because someone offered more, so I moved on. On 8 November, I inspected a property scheduled for auction in Garden Street – smaller than the first one – but found it very appealing. I talked to the agent and put forward an amount I was prepared to pay. I was successful this time so I passed the details onto my solicitor so she could start reviewing contracts and other documents.
At 12.43pm, 11 November 2011 (the famous 11/11/11), I received a call from the agent handling the Botany Road property advising me that the sale didn’t go through. He asked me if I was still interested and invited me to make an offer. This was so unexpected! It changed the game completely as I was faced with a huge task of deciding which one I should go for! I weighed things up by talking to a number of people. I remembered falling in love with the Botany Road unit so this must be fate. I rang the agent at 3pm to put in an offer. He said that he would talk to the vendor to discuss. He rang me at 3.30pm, gave me the good news along with instructions on what to do next. What happened after that was a whirlwind! I transferred 0.25% of the property value to the real estate agent trust account for them to hold the property for me. I advised my solicitor to stop working on the Garden Street property and wait for the contract of the other property. I called my lender to give her a heads-up about the purchase. I took a cab and headed to the agent’s office to sign the contract – conscious about the time. I talked to a friend, in between all of these activities, to seek advice. I went home after, and when I arrived at my place, I sat down and reflected on what just happened! I felt drained and fear started to creep in. I asked myself, what did I do? A lot of ‘what if’ questions started to appear in my mind. It was all too much so I phoned the same friend again to talk about the day’s events, hoping to hear that I didn’t do anything I would regret later on. This helped me relaxed.
7. Hiring a solicitor. Google helped me find my solicitor even though I asked my colleagues and friends for recommendations. I got quotes from different providers (they’re not cheap!) and decided to hire one from the list. Honestly, it took me quite a while to get used to saying ‘my solicitor’. I felt like a big shot tycoon who has solicitors to run his affairs. I slowly learned her role and responsibilities so eventually got more at ease in dealing with her. We did a lot of phone-tagging and email-tagging. There were days I felt embarrassed at work because of needing to answer her calls in the middle of meetings. Thank God, my team was very supportive. All in all, I am pretty satisfied with my solicitor – she answered all my questions. She did ask me, one time, to call the council to confirm that the property I was planning to buy wouldn’t be affected by future road widening projects. I was surprised because I thought this would be one of her things-to-do. Good thing she found a clause in the contract stating that the building (hence property) would not be affected.
8. Asking for a cooling-off period. Unlike buying from an auction, private treaty allowed for a 5-day cooling off period to make sure that everything in the contract was satisfactory. This also gave the bank time for them to do their valuation. My lender assured me that she only required 5 days when I spoke with her Monday morning. She even promised that she expected to have news by Wednesday. Mid-week, I rang her to check the progress and to my chagrin, she said that they hadn’t completed the valuation, that it was only scheduled for Thursday and the report should be available Friday. I wasn’t happy because Friday was the last day of my cooling-off period. Defaulting would mean forfeiting the 0.25% deposit. Also, since the property was still advertised at that time, I could end up losing it due to gazumping! She suggested that I request for a two-day extension so I quickly dialled my solicitor’s number and instructed her to do so. Luckily, the vendor approved of it! Lessons learned – asked for a 10 day cooling-off period if you can!
9. Paying the deposit. After getting that much needed ‘go-ahead’ signal from both my lender and solicitor, it was time to arrange for the deposit cheque. When I arrived at this stage, I felt like my heart was going to explode! The stressful days and sleepless nights seemed to be ending. The trophy was within reached but there were still tasks to be completed. Because I considered this as a milestone, I scanned a copy of the bank cheque for my records. Looking at the $$$ amount would serve as a fitting reminder of how I bravely took a giant leap and learned from it in the process.
10. Signing the contract’s dotted line. This is it! The ink from my pen was barely dried when I realised that I had just sold my soul to the bank. I don’t own this piece of property yet – the bank owns it until I paid them fully. Nothing has changed. I’m still ‘renting’ and the bank is my new landlord. The only difference is that, now, I have to pay for the strata levies, council and water rates, aside from the mortgage repayments.
What a roller coaster ride! Yes, I am looking forward to moving to my new residence and to call it a home but the responsibility attached to it calls for a drastic change in the lifestyle I was accustomed to. This means no shopping for bags, shoes and clothes, no trips abroad in the near future, etc. How will I be able to do this? Oh my! Have I bitten off more than I can chew? One thing is for sure, come settlement date, I will be starting a new chapter in my life.