How To Buy A House

Savvy helps you find the answers to all your questions about how to buy a house.

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, updated on August 7th, 2023       

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Buying your first home can seem like a daunting prospect, but it doesn’t have to be. Understanding the process from start to finish will help you enter the house buying process with a clear mind and greater confidence. Fortunately, you can learn all about how to buy your new home and get the best deal available right here with Savvy.

What are the steps involved in buying a house?

These are the steps involved in buying property in Australia

  1. Work out what your household budget is – use Savvy's budget planner to understand your current household income and expenses. Include every single dollar that is earned and spent – right down to the small change you may put into a parking meter when you go shopping.
  2. Plan for the next stage of your life – think about your needs in one year, three years or five years' time. Are you planning a family? If so, budget for a possible reduced income at least during the late pregnancy and birth period.
  3. Work out how much deposit you’ll be able to contribute towards the purchase – once you’ve worked that out, use Savvy's borrowing power calculator to see how much you may be able to borrow with that size deposit. There’s no real answer to the question ‘how much money do you need to buy a house’ because that will depend on how much deposit you’ll be able to contribute and the loan repayments you’re able to afford
  4. Think about what sort of home you'd like to live in – narrow down your choices. Choose from loans for detached or semi-detached houses, units, apartments, townhouses and duplexes. Think carefully about the area you want to live in and research school catchment zones when making up your mind (if appropriate).  Decide if you want to buy an established home, a newly-built home, or build your own home in your chosen area. Work out what your home priorities are, such as the number of bedrooms, bathrooms and garage spaces you need (if any).  Think about the size of home you need now and in five years’ time.
  5. Start looking at property prices in your chosen area – see if you’re able to afford to buy the sort of home you’re after. If not, you’ll either have to work out a savings plan and save up a larger deposit or compromise and choose to buy in an area with lower property prices.
  6. Use Savvy’s free comparison service – when you’re ready to start looking for your first home loan, you can compare lenders and home loans to find one that suits your needs right here. Savvy can help you find first homeowner packages, owner-builder loans or just the cheapest no-frills home loan available in Australia.
  7. Approach your chosen lender for loan pre-approval – you can do this straight from Savvy’s comparison site. To apply for pre-approval, you’ll need to provide several documents which prove your identity, income, expenses, assets and liabilities. Submit your loan pre-approval request and wait to hear back from your chosen lender (which should be within a day or so).
  8. Start looking for a property – this is the fun part: once you’ve got loan pre-approval, it’s time to go and find your dream home. When you find a property you wish to purchase, the real estate agent handling the sale will guide you through the process of putting in a formal offer, which will include ‘subject to’ clauses including subject to finance and subject to a satisfactory pest and building inspection.  You will also need to provide a deposit at this stage, which the real estate agent will hold in a trust account until it’s time to pay for your home.
  9. Sign your sale contract – when your formal offer is accepted, and you’ve received pest and building reports that show there are no hidden issues, it’s time to sign your formal sale contract, subject to finance approval. It’s at this stage you will finalise your settlement date with the vendor, which is the day your conveyancer pays the vendor their money, and transfers the title deeds of the property into your name.
  10. Wait for your cooling-off period to end unless you live in WA or TAS, which don’t have a formal cooling-off period. Appoint a conveyancer to do the legal paperwork for you and ask your conveyancer to check the sale contract. Decide on the settlement date.
  11. Determine your government grant eligibility – next, check if you’re eligible for any government grants, such as the First Home Owners Grant, and apply for any which you may qualify for. Your lender may suggest grants or schemes they are familiar with which may assist you with your first purchase.
  12. Pay stamp duty – don’t forget that you’ll have to pay stamp duty (also called transfer tax) on your purchase if you don’t qualify for a first home buyers’ concession. Use Savvy’s stamp duty calculator to find out how much stamp duty you will need to pay in addition to your deposit, as it varies in cost between states.
  13. Complete your full loan application – you can do this with the assistance of your conveyancer and real estate agent if needed. You can expect your lender to get back to you with clarifications and queries before granting full loan approval.  As soon as you do get loan approval, let your conveyancer and real estate agent know the good news so they can prepare for property settlement.
  14. Arrange insurance on your new property – you can compare insurers right here with Savvy to help you find the cheapest home insurance deal available. You should always look for policies which cover you in all the areas you need but don’t break the bank.  Additionally, make sure you have sufficient contents insurance to protect your possessions whilst you’re moving and after you move into your new home.
  15. Start planning the details of your move – book your furniture removalists, and start selling unwanted items. Don’t forget to plan for the needs of your pets on moving day
  16. Disconnect and reconnect utilities – remember to arrange disconnection of the power and gas from your old property and arrange for reconnection in your new home. Think about any internet, NBN connection, cable contracts or pay-to-access television services you may receive and make sure you arrange their transfer to your new property if appropriate.  Also, remember to redirect your mail through Australia Post.
  17. Receive the keys to your new property – when settlement day finally arrives, plan to receive the keys to your new home sometime after midday, after which you can enjoy moving in.
  18. Make sure your details are up-to-date – once you’ve had time to settle into your new home, ensure you change your address with all your service providers, including your lender and bank, doctor and medical providers, insurance providers, car registration, your children’s schools, Centrelink and MyGov plus the electoral office as well as family and friends.

How much do you need for a house deposit?

How much money do you need to buy a house?’ or ‘How much is a house deposit?’ are commonly-asked questions.  A standard home loan deposit is 20% of the agreed purchase price of the property.  Therefore, how much you need to buy a house will depend on how much you want to spend on your new home.  The cheaper the property to be purchased, the less deposit that will be required.

If less than a 20% deposit is provided, most lenders will require the borrower to pay for Lenders Mortgage Insurance (LMI), which is protection for the lender against the increased risk of accepting a lower deposit.  LMI can amount to thousands of dollars and can significantly increase the overall cost of a loan.

Top tips to make your home loan approval process go smoothly

Do your research and compare lenders

Each home loan application you make will appear on your credit report for all future lenders to see, so it’s crucial that you only apply to a lender if you fit their lending criteria. Savvy can help you compare lenders and loans until you find one that’s a perfect fit for your needs from the get-go.

Submit a good, clean, accurate application

The quality of your loan application will determine whether it is accepted or rejected, so make sure you submit a high-quality application.  Check all your documents before you scan or photograph them, make sure they’re clear and legible and provide all the paperwork required in the correct order to maximise your chances of loan approval.

Calculate what your loan repayments will be

Only apply for the smallest loan you need to buy your home and make sure you can comfortably afford to make your loan repayments, even if interest rates rise in the future.  Use Savvy’s loan repayment calculator to work out how much your home loan repayments will be.

Make sure your credit score is the best it can be

In preparation for your loan application, pay off your credit cards in full, reduce the limit of your credit cards and cancel any other lines of credit which aren’t essential.  The limit on your credit cards counts towards your total liabilities, so will reduce the amount you’re allowed to borrow.

Here’s more of your frequently asked questions about how to buy a house

Do I have to be an Australian citizen to buy a house?

Yes – in most cases, you’ll either have to be an Australian citizen or have a permanent resident visa to be accepted for a home loan by most lenders.  However, some online lenders will approve home loans to people holding spousal/partner visas and interdependency visas, depending on your personal situation.  Temporary residents or foreign residents wishing to purchase real estate in Australia will need to apply to the Foreign Investment Review Board for permission to purchase.

If I fit the application criteria for the First Home Owner Grant (FHOG), will I automatically be approved?

Not necessarily – the FHOG scheme is an Australian Federal Government scheme but it is administered by the states.  The approval rules for each state change from time to time, and some states place a cap on the number of FHOG approved each year, so you should check on your state government website to ensure that applications for FHOG are open when you intend to apply for a grant.

How long does it take to get a home loan approval?

Home loan approval usually takes between seven and 14 days, but you should allow up to a month for full approval on your loan to be granted. During this period, it is not unusual for lenders to contact borrowers asking for clarification or more paperwork, so don’t be concerned if you do get phone calls from your lender whilst your claim is being assessed.

Are conveyancers the same as solicitors, and how much do they charge?

Conveyancers can be solicitors (lawyers), or they can hold specialist conveyancing qualifications and be registered as a conveyancer.  They’re legal professionals who specialise in property transfers.  The cost for a conveyancer’s services varies from state to state, but is generally between $600 and $1,200, depending on the complexity of the property transfer.

What is the usual settlement period when buying a house?

The most common property settlement period is between 30 days and 60 days, although settlement can occur later than this by agreement between the buyer and the seller. The actual settlement date is decided between the two parties when the final sale contract for the property is signed. This settlement date can be varied by mutual agreement, but if a default occurs, financial penalties are imposed for each day the settlement is delayed.

If I get loan pre-approval, will I automatically get my loan approved?

No – loan pre-approval is not the same thing as full loan approval and doesn’t serve as a guarantee that your loan will be approved.  It’s just an estimate of the sum a lender may approve given the details provided to the lender at the time.

What other costs are there when buying a house?

In addition to legal and conveyancing fees, stamp duty, and the loan establishment charges your lender will ask for to set up your mortgage, you’ll also have to budget for the cost of your furniture removalists (which can be anywhere from $1,000 to over $5,000 depending on how much furniture and personal effects you own, and also the distance that you are moving).  Don’t forget utility supply charges, internet connection fees and possibly the cost of hiring cleaners to thoroughly clean your former home after you move out.

When settlement is complete, can I move in straight away?

Once property settlement takes place, you’ll receive a phone call from your real estate agent or conveyancer to let you know the property is now officially yours.  They will arrange delivery or collection of the keys to your property and, from that moment on, you’re free to move into your new home.

When I sign a contract to buy a home, do I have to insure it?

Yes – you should arrange home building insurance from the day you sign the formal sales contract to purchase your new home.  The vendor of the property should still have it insured up until settlement day, but just to be safe you should also insure your new purchase from the day you agree to buy it.

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