How to Choose the Right Legal Team for the First Home Purchase 

In our 12th podcast episode of the First Home Show, we had a guest, Rishi Bhatia from Kriya Mortgage Managers, an expert in the Melbourne real estate market. We talked about the importance of having a good property team when purchasing a property. You’ll find out all you need to know about team members you should have as support, such as a legal mortgage broker, conveyancer, and property lawyer. Finally, we’ll show you why they’re important.   

We know that the general public, especially first-time buyers, feels they do not have control when buying a property. However, with the right experts, you can regain control.

What sort of team members first-time homebuyers should have on the team?  

First, you need a good mortgage finance broker and experienced conveyancer. Additionally, you may consider hiring a building inspector and a buyer’s agent.   

The buyer advocate’s role is to find the right property for you, knowing and respecting your needs and budget.   

The building inspector will help you understand the quality of the property you are purchasing and the taxes related to it.

Why is it important to have a great mortgage broker?

Today, in the real estate market, the government is keen to get first-home buyers into housing. They are providing a lot more options. And this is where a good mortgage broker comes to help. They know all the facilities, they know all the policies, and they understand what the government is offering.  

The regular downpayment is 20%. With a good mortgage broker, you can buy your first home with a deposit of only 5%. Your mortgage broker will help you with that. You won’t even have to pay stamp duty. The Victorian government guarantees the loan.  

There’s no lender’s mortgage insurance or LMI to be paid. If you’re earning above some level, you don’t qualify. Obviously, there are many factors and qualifying criteria you’ll need help with. If you get a good mortgage broker on your side, they’ll guide you through all the steps.  

You’ve got a lot of help from the government -at a federal and state level with the schemes that are available now, of which a 5 percent deposit scheme is among the most important.

How do mortgage brokers help create wealth?  

If wealth creation is your goal, getting the mortgage broker involved right from the outset is the first step. I would even argue that you should get them involved as early as possible, not just before you buy but even a year before the financial planning phase. Mortgage brokers will help you realize what income levels you need to be at, what expenses you need to drop, and which credit cards you might need to close.  

If you can plan, by the time you want to go into the market, you’ll be ready.

Mortgage Brokers Protect Credit Score 

Another critical point is that the mortgage broker protects your credit score. If you go straight to a lender, you will make too many inquiries, which will negatively impact your credit score.  

With a mortgage broker, you inquire through them – they are the middle person who protects the client’s credit score because they are making the inquiries on your behalf.

How do mortgage brokers help if the first home buyer has a poor credit score?  

In cases of stolen identities, the credit score is devastated. A good mortgage broker can hugely help in such situations. They help clients engage with the ombudsman to get their name clear and their credit score up and running.  

Before you decide to purchase your first property, we recommend taking one credit card with a small limit and using it wisely, thus building your credit score smartly. Remember, you should start building your credit score immediately after graduating from high school. Ten or fifteen years later, when you decide to purchase your first house, you’ll be ready with an excellent credit score.  

If you do not follow our advice, you will have terrible scores and a poor negotiation position.

Importance of Vetting Process  

Mortgage brokers are like guardians who secure that you don’t end up in a mess. If you are a parent with teenage children, for example, we advise you to start a relationship with a good mortgage broker and start having conversations about credit scores to help your children.  

You have to vet every person you work with to buy your first property to ensure they are the right fit for you. It’s not just about price. Mortgage brokers don’t charge like top-tier or medium-tier solicitors would. But price is not everything, especially with a legal professional.  

Mortgage brokers can do a lot more for you, especially if something curly comes up or if you need assistance on short notice.

Saving a Few Dollars Might Cost Thousands in the Future

In the final score, with a great legal team, the overall cost will be much lower than without them. The reason is that any mistake or unforeseen problem costs thousands of dollars in the real estate world, let alone the price of your peace of mind. How much would it cost to lose your dreams or get stuck in years-long legal problems? Even fines related to property transactions are astronomical.

Additionally, legal problems may occur at any moment. When it happens, you need your team to be available and ready with all the documentation updated.

When you hire cheap legal support who has dozens of files on their desks, you risk negligence or unresponsiveness. Such situations cost a lot.

Reacting in Emergencies: Legal Team Responsiveness  

Make sure that you’ve got someone on your team who’s able to act promptly and advise you properly. Before hiring a mortgage broker or conveyancer, check if they will be available in emergencies. Spend several hours or days to gather information about the response times they have. Before hiring, everybody looks great on paper. The only guaranteed way to be 100% certain your team is good is by checking reviews and testimonials. Ask for previous cases and check how they handle unusual or difficult situations.  

Good mortgage brokers and conveyancers, due to their expertise, know if something is wrong with the property or the contract – they feel what’s wrong or what will go wrong. In the legal world, small things might cause huge effects.

Example: Parents Mistakes in Property Purchases  

For example, in many cases, we see that the parents bought a property decades ago, but they hadn’t checked everything or had no legal support.

When children want to sell their property, they realize there is a huge mass to be untangled. It takes 6-8 months on average to sort out unresolved legal disputes or wage contracts that have roots many years ago. Unexperienced or overworked professionals can’t handle such situations. They don’t have the knowledge or time to solve problems in the right way.  

Unfortunately, when purchasing property, problems may occur in dozens of shapes and sizes, but the solution is usually only one, hidden under the tone of laws and regulations.

Example: Vendor’s Uncertainty  

Another example we often face is when the vendor is not ready or is always fussing about something. A good legal team is irreplaceable in such situations. The conveyancer’s expertise is very valuable, as shown by the contract review. A mortgage broker brings additional expertise to the table. When they work together, 99% of possible problems will be avoided, or disasters will be prevented, and the customer will settle on time. They protect you from penalties or delays because the vendor wasn’t ready.

To conclude, expertise and professional legal input are vital to the entire home-buying process. It’s all about managing the risk. It’s not enough to go for just a free contract review. You really need to get it looked over by a seasoned professional who understands whether there are any red flags in the contract. If there are any potential problems, they must be capable of negotiating any changes to better protect you.