The Ultimate Australian Home Buying Guide

Information verified correct on December 8th, 2016

The ultimate home buying guide feature image 2

From reviewing your lifestyle needs to researching different postcodes and comparing your finance options, the Home Buying Guide takes you through the steps required to purchase a home in Australia.

Purchasing a home can be a complex and time-intensive process that demands research, due diligence and patience.

To help you navigate the home buying process, we've created a six-step guide that explains the process and key considerations associated with buying a new castle.

Whether you're in the market for your first home or you're an adept homeowner returning to the market, there is always something new to learn. With innovative technologies and a dynamic property market, there is a wealth of information available to you.

Read the Home Buying Guide as an entity or skip ahead to the section that tickles your fancy; it's up to you.

Home buying 1

Lifestyle check


Home buying step 1 teaser

In this introductory section, we discuss how you can undertake a preliminary lifestyle check to see if you’re ready to own your castle.

home buying 2

Suburb research


Home buying step 2 teaser

Amenities, infrastructure, and suburb character are just some things to consider when it comes to selecting a postcode. In section two, it’s all about location.

home buying 3

Property type


Home buying step 3 teaser

From design to structural integrity to the eco-friendly factor, this section covers everything you need to know when choosing property type.


home buying 4

Comparing finance


Home buying step 4 teaser

In section four, we outline the steps you need to take to get finance ready. We explain how home loans work and what you can expect to pay.


home buying 5

Purchase preparation


Home buying step 5 teaser

Learn about purchase methods, making an offer, how contracts of sale work, and what your rights as a property owner are in section five.


home buying 6

Moving in


Home buying step 6 teaserBefore moving day, there’s a few things to organise. Research the body corporate or local council, book a removalist and get your utility accounts sorted.

What are the costs of buying a home?

Stamp duty, mortgage registration fees and legal fees are just some of the costs associated with buying a property. Use our calculator and drop-down menus below to learn more about the variety of costs needed to buy a home.

You will need to obtain a quote from a third party for the following fees.

  • Conveyancing - There are no set fees for this, which is why you need to obtain a quote in writing from your conveyancer. You will need to be able to provide the details of your transaction, such as the value of the property.

  • Building and pest inspections Pre-purchase inspections will reveal whether the property has had any structural or other issues which may cause problems further down the track.

  • Surveying fees - Surveying can help confirm the location of the buildings on the property and their boundaries. This is useful if you want to build fences and to confirm there are no encroachments onto the property by your neighbours.

  • Getting utilities connected - If you want to ensure that you have gas and electricity available and check the quality of it at your new property, then it may be worthwhile getting your utilities checked. Gas will need be reconnected in your name.

  • Removalists costs - This will vary depending on where you're moving to and the distance needed to travel. You also need to consider the quantity of the furniture and whether or the removalists will be packing the furniture for you.

  • Home and contents insurance - Speak with your insurance agent so you understand what type of insurance you need. It is recommended that you take out cover before settlement and if you are borrowing money your lender will require a building insurance policy noting their name as mortgage. Learn more about home and contents insurance and how it might help you.

You will need to consult with your state/territory revenue office for certain fees.

  • Mortgage registration fee - This is in addition to land transfer fees and is a government charge. It also covers the charge to register for the mortgage documents and is paid on behalf by your lender.

  • Mortgage transfer fee - Whenever a property is transferred to another owner a document called 'Transfer of Land' needs to be lodged and registered with the State Titles Office according to your State. It is a record of the change of ownership and the cost will vary from state to state.

  • Land tax - You are liable to pay stamp duty to the government if you buy land, which includes the buildings. The amount varies from state to state and is based on the valuation or the property price, whichever is greater.

  • Application fee: This is charged by your lender to process a loan application.

  • Settlement fee: This covers the cost of transferring funds from your lender to you, and should include GST.

  • Valuation fee: Your lender will need to have your property valued by a registered valuer to estimate the market value of the property.

About tips for first home buyers in Australia 

Lenders Mortgage Insurance (LMI)

Most lenders require you to pay LMI if you have less than 20% deposit for a full documentation home loan. Depending on the lender, you can pay LMI upfront or it can be capitalised into the loan.

LMI protects the lender in the event that you default on your home loan. Typically you will pay LMI on your home loan if you are borrowing more than 80% of the property value on a full documentation loan, or more than 60% of the property value on a low documentation loan.

To determine how much the Lender's Mortgage Insurance (LMI) premium is, you need to contact the lender who's providing you with the loan.

Frequently asked questions about buying a property

Some people are worried that the seller is asking more than the property is really worth or that the real estate agent may have put too high a value on the property. If you are in any doubt you might want to look at the asking prices on other similar properties in the area that are up for sale.
This will depend on what sort of mortgage you can get, and this will be dependent upon your earnings and financial status. Before you start hunting around for a property you should make sure you talk to a bank or broker and work out how much you will be able to borrow, as you can then target your search towards properties that are within your budget.
A buyer's agent is an expert that acts solely for the buyer. There are many people who like to use a buyer's agent but many others who prefer not to, so this is a matter of personal preference. You will usually be charged a fee for this, so affordability will be one of the deciding factors. However, you may find that you are fine using just a real estate agent.
It is possible that you will do a title search and find that there is a caveat on the property, which means that another person or company has an interest in the property, such as a company that has issued a secured loan against the property. You need to look into this and make sure that it is removed before you make any commitment.
In most areas it is solicitors that will arrange this. However, specialist surveyors can do it in some areas and there are even DIY kits available in some states. However, most people prefer to use a professional for peace of mind rather than opting for DIY.
It is best to have cover begin when you exchange contracts, which means that in the run up to completion you need to be looking at insurance providers, comparing costs and cover, and pretty much have an insurance plan and provider in place ready for the day you exchange your contracts.
When you compare mortgage providers and loans, you should look at a number of things such as the rate of interest charged, the amount you will be able to borrow, the choice of repayment terms on offer, and any upfront costs associated with the mortgage.
This will depend on the lender you go through and the amount of money you borrow. You will normally need to put down 20% of the amount you borrow so you should compare deposit requirements from different lenders to get the best deal.
This can be helpful, as it means that you will be approved in principle before you start looking, so you know exactly where you stand, as will the seller, who is more likely to want to sell to someone who has been pre-approved.
Before you start looking at houses, you should work out whether you can afford all of the associated costs, particularly if it is your first home. This includes bills, food, insurance costs, living costs, travel/vehicle costs, mortgage, and any other financial commitments you may already have.

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4 Responses to The Ultimate Australian Home Buying Guide

  1. Default Gravatar
    peter | December 1, 2014

    Just an enquiry just sold my flat for $337,500 and have already
    placed a deposit of $30,500 towards a property @ $467,000 which leaves $437,000, total fees upfront just on $30,000, I have $130,000 which will cover the costs and the difference between both places, i am waiting on my solicitor to finalize all paper work and settlement day, in this respect do i guess have to organize a bridging loan? uncertain as to how much?

    • Staff
      Shirley | December 2, 2014

      Hi Peter,

      Thanks for your question.

      It doesn’t sound like you need bridging finance as you have enough funds to cover the costs of moving from one property to the other.

      A bridging finance is useful if you have a cash flow problem during this period. However, it’s advisable that you speak to your current lender or agent to confirm if you’d need a bridging loan.

      All the best,
      Shirley

  2. Default Gravatar
    Nikki | June 26, 2014

    Do you have the trail commission percentages from the different banks when they pay the broker?

    • Staff
      Shirley | June 27, 2014

      Hi Nikki,

      Thanks for your question.

      Unfortunately we don’t at this current point in time. However, you can find this information in the Credit Guides of the respective Mortgage Brokers.

      Cheers,
      Shirley

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