The answer is yes you do and you need it in every case, unless of course you are legally qualified yourself.
The purchase of a property is almost always a substantial investment and there are two complex contracts involved;
- Contract of Sale ( CoS) – these are generally specific to the state in which the property is located. There are important differences between the states and so you need advice specific to that state’s laws. The CoS specifies the details of the property being purchased and obviously you need to ensure that you are buying what you think you are buying. This involves title searches etc and checks to ensure that no one else has a claim on the title.
The CoS also details what is included in the sale ie: house fittings such as dish washer etc. More importantly the CoS specifies the start date of the contract, the settlement date ( when money changes hands) and the “get-out dates” ie: your last chance to withdraw from a contract – these dates allow for cooling off, building, pest inspections and for you to arrange finance. It is vitally important that you understand that apart from the cooling off period, these other clauses are specific and so you cannot use these clauses as a get-out just because you have changed your mind. Many contract finance approval clauses require that you specify a lender and it is not unusual for a vendor to demand to see a letter from that lender confirming that they have rejected your application. If you have not made a reasonable an attempt to obtain the finance you may be in breach and you really need to understand what that means.
The CoS may also include information about GST payable and/or the current use of the property. This can be very important if for instance the property was not technically being used for residential purposes or if the property is being sold with tenants in possession. If you are purchasing a property as primary place of residence it really must have vacant possession ie: no one paying rent, on the date of settlement. Get this wrong could impact the ” main residence exemption”.
- Mortgage Documents – once again this is a contract and as such requires legal perusal. The mortgage contract is often weighted strongly in the favour of the lender however you have legal rights and it is important that you understand the limitations and your responsibilities. The MFAA recommends that broker members should never attempt to provide advice to clients on what is in the mortgage contract or its attachments. It is important that you understand your responsibilities and the implications of any breach on your part. This includes failing to make repayments but also covers things such as renovations or demolishing the house.
One of the most common areas for confusion is the schedule of fees. This outlines every possible fee that may be applied to the contract because if the lender does not list it then they cannot charge it. However most of these fees only apply under specific circumstances, most of which are in your control and so will not be applied unless you cause them to be. The fees often mention stamp duty and other charges that should not apply however if the government were to change policy and demand payment at settlement then the lender is covered.
There are many participants in the home loan process these include you the buyer, the vendor, lender’s staff, real estate agents, valuers, inspectors, tenants, accountants, conveyancers, solicitors and finally your mortgage broker. Our role is to assist you in selecting a suitable home loan and then managing the process of successfully obtaining that finance. We liaise with many of the other participants however we are legally and professionally constrained and so please do not ask your mortgage broker for legal or tax advice.