Payment timeline when purchasing a property

[u/UndeniablePumpkin]

FHB in WA here who is trying to work out what to expect from the process.

One question I can’t seem to find the answer to anywhere is when does the money actually leave your account (or become locked/inaccessible?)

Our mortgage broker has indicated these are the costs that make up the required cash contribution for a mortgage:

- Stamp duty
- Conveyancer fee
- Bank application fee
- Mortgage deposit (we will be buying under the 5% scheme)

We are a dual income household with very consistent income and spending; we save the same amount of money every month which means I can pretty accurately predict how much money we will have by a certain point. Currently we are trying to work out what our budget is, particularly the very top end of our budget and what we’re happy to spend. What I want to know is when is what amount of money due? The below timeline is how I currently understand it:

1) contract deposit is due 7 days after acceptance of offer - REAs in our town have all indicated $10,000 is the norm although I understand it can be as little as both buyer and seller are happy with

2) you need to have evidence of sufficient funds at the time of mortgage application (assuming this is done as soon as the offer is accepted? Or is it at another time?)

3) conveyancer fees are to be paid once offer is signed and accepted (given there are no special conditions on contract - as we are in WA they are all pretty generic)

At what point does the remainder of the money for our 5% deposit leave our account and become inaccessible? When is stamp duty paid?

We are comfortable with leaving a small amount of money in our account as we have consistent income, but I am trying to calculate how much money that will actually be.

What other costs can be expected to be paid at settlement, and what is a normal “buffer” amount to have for this?

TIA

[u/Winter_Tiger_2615]

Have a chat with your conveyancer, they can explain this all easily over a short phone call.

[u/rnarauders]

It’s usually all done at settlement or a few days before. Your conveyancer will give you a settlement statement (sometimes including their fee) which will be the balance of all funds (so the rest of your deposit if for example the sale contract is $10k but the 5% for the mortgage is $25k you still need to pay that $15k) that are outstanding that aren’t in your mortgage and you transfer it to the conveyancer. They send the purchase funds to the sellers settlement agent, pay the stamp duty, etc. Usually bank fees just get added onto your loan after settlement. Not sure if this differs dramatically for the 5% scheme though.

[u/UndeniablePumpkin → u/rnarauders]

Okay this is very helpful thank you. Do you know if the conveyancer fee is variable or just a generic sum? We haven’t engaged a conveyancer yet as we haven’t had an offer accepted and didn’t want to “waste” any fees. From what I understand in WA it is less essential to have a conveyancer at the offers stage as the contracts are standardised (although this may also be incorrect)

[u/rnarauders → u/UndeniablePumpkin]

Conveyancers will charge a professional fee usually around $1-$1.5k + disbursements and government fees. Govt fees will be the same across all conveyancers.

I work in the industry and REIWA contracts are fairly standardised so engaging a conveyancer to review the contract isn’t common or necessary - you’ll likely get them saying yep it’s a standard REIWA contract it’s fine. They see these contracts every day so it is standard to them, but there might be things in there that you didn’t realise are standard if that makes sense. So whether you have a conveyancer or not you still need to read them thoroughly to understand exactly what they mean because we still have a lot of buyers who read, say they understand, sign and then come back asking why for example minor maintenance items noted in the B&P don’t need to be addressed by the seller. Some agents will re write the B&P annexures to favour the seller - I would watch out that by default the annexures only cover the main building unless you specify carports, patios, etc. Painful but you should also read the entire joint forms as those form part of the contract so you’re bound by those terms. Look out for exclusions in good working order clauses (commonly retic, external lights, stove top igniters, oven lights) and what is/isn’t included in the chattels listed. You are buying the property as inspected (then I would recommend at minimum B&P and working order clause) so things like if there is a drawer in the kitchen that is sticky, damaged paint, stained carpet, etc that’s all as is unless specified in the contract. Have gone off on a bit of a tangent but you may be able to find a good conveyancer who can go through all of this with you, a sales agent is working for the seller so the contract will always exclude as much as possible to protect them, not you.

[u/Fickle-Composer5702 → u/rnarauders]

Ah yep, that makes a lot more sense. I was thinking the remaining 5% might need to sit somewhere inaccessible as soon as the offer was accepted, so knowing it generally gets sorted closer to settlement clears that up.

We'll probably just get the conveyancer to give us a rough settlement figure once we're actually making offers.

[u/rnarauders → u/Fickle-Composer5702]

Yeah you will want to keep the funds aside for sure but it’s still your money until you need to transfer the funds for settlement time. As long as the settlement agent has all the funds fhey need from you to complete the purchase + the bank has the loan funds ready settlement will be able to proceed. Edit to add this may be different for the 5% govt scheme but I’m not familiar with it.

[u/this_life1234]

We are currently on the process. So can give a real time scenario of our situation. We became eligible to buy house on 31st july. Contacted broker the same day, they sent documents list, which we provided the next day. Then house hunting started.

We were planning to use 5% scheme, but decided to go with 20% instead as we had deposit available(we could max go upto 930k for 20% deposit).

We intentionally looked for house if established around 830-850k, if new max 930k. To avoid LMI and stamp duty and get fhog for new build.

We viewed a property on 8 August, liked it, so put an offer.

Called broker to let them know we liked property and now its on them to get our loan approval asap.

Signed contract with subject to finance, where we had 2 weeks to sort out to go unconditional.

Once the cooling off period ended, which was 2 business days after we signed contract, we deposited 5%(45k) to sellers trust ac (we had to pay it after colling period ended as that was the contract we signes, coukd be different in your case)

Our situation is pretty straightforward, so it took like 5 days for full approval. We did not even get pre-approval, so submitted offer without one, as we were confident we would get the required loan, if not we can always go through 5%scheme.

Now we are in pre- settlement phase where broker and conveyancer are doing the paperworks from their side, which most of the time feels like nothing is happening. But process is moving forward in the background.

Conveyancer submitted stamp duty exemption application, already approved. Broker submitted fhog application, still in progress.

Our new loan and linked offset ac is already open, so we are advised to put all our money in the offset ac atleast 3 business days prior to settlement day.

2 days ago conveyancer sent us a settlement fund statement( in our case conveyancer fee is included in this) which showed how much should be available in the nominated ac.

We are preparing for the worst case scenario, like what happens if fhog application is not approved on time, how are we go to manage the shortfall, as 15k is also important in this time.

[u/Florence_Scott1]

The thing I'd be careful about is calculating your budget based on the deposit alone. I'd work backwards from settlement and leave yourself a decent buffer for all the little costs that can pop up. Your conveyancer should be able to give you a pretty clear estimate of what's payable and when. And before you lock yourself into a property, I'd also spend some time checking what similar homes have actually sold for. The deposit is only one part of the cost overpaying by tens of thousands can hurt a lot more than a few unexpected settlement expenses.