We’ve all dreamt of having a place of our own. Yet buying a house is one of the biggest investments you’ll ever make, whether it’s for your primary residence or as an investment property.
Australia is a hot property market, and thanks to the current economic climate, real estate has seen a surge in prices.
Getting a house in Australia is a challenge. With low interest rates on home loans, homebuyers have flocked to the market, increasing demand. As the laws of supply and demand work, there are limited properties for sale.
To top it off, unlike most international markets where the agent works for the home buyer, Australian real estate agents work for sellers, making it more challenging to secure a listing.
However, Listing Loop provides a platform where buyers get access to secret properties, also known as pre-market/off-market properties.
Off-market properties are those that may be unavailable on mainstream real estate websites. On the Listing Loop platform, buyers get first priority access to new properties for sale. Agents list their properties as soon as they close with the seller, even before preparing marketing materials.
There’s a lot that goes into buying a house before you can officially own it. Getting a property that suits you is just the first step.
We’ll give you a step by step guide on how to buy a house in Australia, from budgeting to signing a contract of sale to moving into your new home.
The first step before making any major financial decision is drafting a budget. A house is a huge expenditure, and there are a few factors you need to consider when drafting a budget.
Your job security
You have your ideal house in mind, great. Can you afford it? What's the purchase price relative to your financial situation? How much do you save every month?
When demand is higher than supply, you’ll need to offer the seller a higher amount than the asking price to increase your chances of securing the deal. Keep in mind, all figures in the budgeting stage are tentative.
Track your income and weigh it against your expenses. How much do you need to set aside for the initial deposit? Can you afford the monthly repayments?
Job security is important, too, especially when you get into a huge commitment such as buying a house. Do you have a plan in case you lose your current source of income?
With a reasonable budget, you can now get down to the logistics.
Now that you know how much to save for a down payment and what to set aside for monthly mortgage repayments, you need to work out your borrowing limit.
First, let’s look at the factors that affect your borrowing capacity:
Full purchase price
Your income and other financial commitments
Property down payment
Home loan type
Terms of repayment
Reach out to a mortgage broking firm like Lending Loop to help you figure out your borrowing power based on your financial situation.
There are online tools to help you calculate what your limit is. However, the figures you get will differ depending on the lender.
The calculated results are just figures to guide you and don’t serve as a quote or home loan offer.
This affordability calculator will give you a rough estimate of the amount you can borrow and other costs you’ll incur depending on the state you reside in.
A home loan calculator will give you an estimate of the monthly repayments based on the amount you request, the loan term period and interest rate.
Keep in mind; there are other costs aside from the purchasing costs, which are:
Costs incurred at the start of the mortgage
Costs incurred during the buying process, excluding the buying costs
Costs incurred should you breach the agreement
Type of fees
Lenders mortgage insurance
Home loan exit fees
Early exit fees
Fixed-rate break costs
When requesting financing, it's important to have all these figures in mind (including stamp duty fees) to plan accordingly.
3. Find Mortgage Offers in the Market/Via Your Mortgage Broker
Finding offers is challenging, but you have to explore your options before signing anything.
Do your research. The more you know about the home loan market, the better equipped you’ll be upon negotiation.
Ask your mortgage broker about the different loans on offer and identify what best suits your financial situation. With high competition in the home loan market, you need strong negotiation skills to get a great deal.
Expert tip: Before you accept any offers, ensure your lender is accredited by the Australian Credit Licence to avoid being scammed.
4. How to Choose a Home Loan
Home loans have different features, depending on the lender. There are three important factors to consider when reviewing a loan offer.
Loan offers with shorter-term periods reduce the total amount you’ll pay to your lender. However, it’s important to note that longer-term periods provide lower interest rates.
When it comes to interest rates, the lower, the better. Choose a mortgage with a lower interest rate so that you won’t have to stress out when it comes to repayment.
Expert tip: Find out if you can get a variable rate loan. Variable-rate loans charge you interest on a reducing balance. The interest repayments are charged on the outstanding balance and not the amount already paid.
Flexible Mortgage Repayments
Flexible mortgage repayments are like insurance policies. However, as much as you plan for the future, you can never really know what might happen.
Home loans with flexible repayments allow you to overpay or underpay so that you don’t default in a financial emergency.
Once you’ve selected a deal, next is the mortgage application process. Most lenders conduct interviews, so have all the necessary documents prepared for your lender.
After your lender has reviewed your qualifications, they’ll issue a pre certificate on conditional approval. The financing takes place once you find a property. You’ll then sign pre-approval loan contracts.
One of the conditions for loan pre-approval is for the lender to conduct a home valuation to ascertain the house’s value before property purchase.
Loan approvals have a validity of 6-12 months, after which you’ll need an extension or reapplication.
The fastest way to start getting matched to properties that suit you specific needs is by downloading the free Listing Loop app.
Huw Roberts“Great app for properties, haven't had an issue with the team based on the Peninsula, they are great. Strongly recommend the app and the service.”
When you sign up as a homebuyer, to help you find a home, nominate the location and type of house you are looking for.
The other house-hunting option is to sign up through a real estate agent who will be your contact point in the home buying process.
Did you know? Properties are updated in real-time on Listing Loop, making it easier to find the hottest and newest property listings.
Once you select a home that interests you, organise a viewing.
Besides property valuation, homeowners should organise a building and pest inspection. Here’s an inspection checklist:
Cabinets and drawers
Renovations and extensions
The inspection fees range between $200 to $600. If you factor in the repair costs to the buying costs, and it’s too high, you can drop the deal and find another property.
8. Make an Offer
Once you’re satisfied after inspection and have settled for a house, the next move is yours. Make an offer to the seller’s agent, and don’t be inflexible to avoid being outbid.
There are three ways to make an offer:
Private sale offer
Exchange of contracts
Bidding at auction
Once the seller has accepted the offer, you enter into a contract of sale, stating the terms and conditions for the property sale.
First, if you have a lawyer, go through the contract of sale to make sure all bases are covered and that there are no legal surprises.
If you don’t have a lawyer, read the contract down to the fine print. When you’re satisfied with the terms, proceed to sign and exchange the contracts.
If there are any changes to be made to the contract, this is the time to do so.
After signing the contract, you have a cooling-off period of up to 5 days where you can back out without legal repercussions. The cooling-off period only applies to private sales.
Next is conveyancing―transferring the property title from the seller to you. You can hire a solicitor or do it yourself to save on costs.
Note that conveyancing costs do not include stamp duty.
Legal Team Duties
The next part of the legal work is for your team, who will conduct a property survey and get approval from government departments and the local council. The process takes about 6 weeks.
The settlement process is where the property is legally transferred from a seller to the buyer after the terms of the contract of sale are fulfilled.
Many lenders hold on to the title and require you to have home and contents insurance for security purposes.
The settlement period can take between 30 -90 days before you officially move into your dream home.
Congratulations on the successful purchase of your new home!
Frequently Asked Questions
How Much Deposit Do I Need to Buy a House in Australia?
Lenders and financial institutions recommend having at least 20% of the property value as a down payment.
Is it Hard to Buy a House in Australia?
If you don’t know where to look and without the right tools, it can be difficult. Download the Listing Loop app to get connected to off-market properties in real-time.
Can I Buy a House in Australia Without Residency?
Yes, you can, but you’ll first need approval from the Foreign Investment Review Board.
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