Are you looking to buy a house to live in or an investment property? Are you planning to have children soon? Do you want an apartment, house or townhouse?
What is your budget, realistically?
Answering these questions is a really important first step. You can even change your mind as you do more research. But you have to have some idea at the start.
Figuring out a realistic budget
One way to figure out how much you can afford to spend on a home is to determine your deposit size and then look at how much a home loan of a certain size would cost you each month.
Use a repayment calculator. Input a hypothetical borrowing amount and a realistic interest rate to see how much you'd have to repay each month. Can you afford the repayments? If not you should recalculate with a lower loan size.
2. Work out how much you can borrow
How much you can borrow for your home loan really depends on your individual circumstances. But it is definitely worth estimating your borrowing power before you start to search for properties.
You can use Finder's borrowing power calculator, but it's a good idea to try multiple bank calculators too.
What affects your borrowing power
Your income. The more you earn the more you can borrow. If you're a low-income earner or you're receiving Centrelink benefits, it may be more difficult to qualify for a home loan.
Your personal circumstances. Every dependent child you have lowers your borrowing amount. Most lenders want borrowers who have employed in the same job for at least 12 months.
Your existing debts. A lender will review your credit report and look at your current debt levels, including limits on your credit cards and HECS-HELP debt. If you have bad credit, you may not be a good candidate for a home loan application. However, there are lenders that specialise in borrowers with bad credit.
As well as the mortgage you need to consider costs like government charges, lenders fees and other costs like conveyancing. Some of the major upfront costs include stamp duty, building and pest inspections, settlement fees and lenders mortgage insurance (LMI).
How your property location fits into your lifestyle is one of the most important decisions you'll make in the home buying process. It's a matter of balancing your priorities and finding a suitable location that will match your needs and financial situation.
You need to carefully consider the geographic location of your property and how this will satisfy your lifestyle needs, particularly if you intend to stay there for an extended period of time.
You may also find that building your home may be a worthwhile option. If this is a consideration you should keep in mind suburbs with potential for future growth.
After fine-tuning different locations for your future home, you now need to research different properties that are listed on the market within these suburbs.
Here are some things to keep top of mind when deciding on property type.
Property size
How many bedrooms and bathrooms do you need? Is the amount of space you need now the same as the space you'll need in the future? Do you want an extra bedroom for guests or potential tenants?
Think about your lifestyle needs and the property size that will allow you to live comfortably.
House or unit?
One of the biggest choices you'll have to make when selecting a property is whether to buy a house or a unit. While houses are typically more expensive, they've historically seen higher levels of capital growth. A detached house also offers more flexibility for renovations and additions.
Units have a lower price point than detached houses, so can be a good choice for first home buyers.
You can start searching for home loan once you've signed a contract to buy a property. But you can actually start this process before you find the right home.
Interest rate. Ideally, you want to find a home loan that offers a competitive interest rate by market standards. A lower interest rate can go a long way in helping you maximise your savings.
Fees. When comparing different home loans, you should keep an eye out for application or establishment fees, ongoing fees and discharge fees. Finding a home loan with fewer fees will help you to minimise your holding mortgage costs.
Features. As mentioned previously, there are many competitive features available that can help you save money. Compare if the lender allows you to make additional repayments without penalty, if a free redraw is available, if a 100% offset account is available, if split loans are offered, if the lender provides packaged discounts, and if salary crediting is offered.
Applying for a home loan
At this stage different steps overlap somewhat. The purchase and settlement overlap with getting a home loan.
You can't apply for a home loan until you've found a house to buy and exchanged contracts.
But you can get pre-approval. This is where a lender gives you an indication of how much you can borrow. This gives you a good idea of your borrowing power. But the lender is under no obligation to offer you a home loan.
Once you're ready to buy you can submit a full home loan application. You'll need to provide ID to your lender plus documents that support your application (details of your income, debts and monthly spending).
6. Complete the purchase
Once you’ve completed your preliminary research, and organised your finance, you're ready to buy.
Make an offer (or bid). Houses in Australia are generally sold in two ways: via private treaty or auction. With a private treaty sale the property owner sets the sale price and the real estate agent negotiates with buyers to achieve the highest possible sales price. An auction involves multiple buyers bidding on the property at the same time.
Get inspections done. If you're buying by private treaty you can organise a building and pest inspection before settlement, and even make the contract "subject to building and pest inspection", which means the sale only goes through if the building is in good condition. If you're buying by auction you have to organise this before the auction (and hope you're the winner).
Engage a conveyancer. If you win at auction or your offer is accepted in a private treaty sale, the next step will be to exchange contracts and pay your deposit to the vendor. Make sure to have a conveyancer or solicitor inspect the contract of sale and handle settlement.
Once contracts are exchanged, you'll be headed towards settlement day. Settlement is the process of paying the vendor and changing ownership of the home.
Your lender will disburse funds for your home loan and you'll receive your keys. You'll now need to sort out your home loan (if you haven't already started looking). And you'll need to make sure you have enough funds in your account to cover settlement, legal and conveyancing fees, as well as stamp duty.
8. Get ready to move in
Once the settlement is complete, the property is all yours.
Before making the transition, ensure that you're fully prepared to enjoy life in your new home from the moment you get the keys.
Sort through your belongings. Now is the time to ruthlessly cull anything you don't need or won't use.
Transfer accounts. Move all your services and utilities to your new address, and have your mail redirected.
Pack. It's a good idea to categorise your boxes by room for easy unpacking at your new residence.
Book removalists. It's wise to leave yourself a buffer of a few days between settlement day and your removalists coming. If you don't and run into any delays at settlement, it could add significant cost to your removalist bill.
The First Home Owner Grant (FHOG) is a government scheme designed to help first-time homebuyers purchase a home by providing a one-time grant. The amount varies by state and territory, but it can be up to $20,000.
Typically, a 20% deposit is recommended to avoid paying Lenders Mortgage Insurance (LMI). However, some home loans allow for lower deposits, such as 5% or 10%, which is especially useful for first-time buyers.
The First Home Guarantee (formerly known as the First Home Loan Deposit Scheme) allows eligible first home buyers to purchase a home with as little as a 5% deposit. The government acts as a guarantor for the remaining 15%, eliminating the need to pay for expensive Lenders Mortgage Insurance (LMI).
Houses offer more space, more renovation options and more privacy. But you're on the hook for more property maintenance, especially if you have a garden or buy an older property.
Pros
Floor space. If you want to conquer the final frontier and get more space for your family to live in comfortably, houses offer far more room to move than apartments.
Outdoor space. If you have a green thumb, you want to expand your home or if you have young kids, a backyard is useful. You can build a pergola or entertaining area and enjoy the freedom of having your own outdoor space.
Flexibility. If you own a house, you can more or less do what you want – there are no owners' corporation or strata laws to abide by. As long as you keep council and building regulations in mind, you're pretty much free to renovate however you like. You can expand or upgrade the house, adding to your equity and making the place more liveable.
Privacy. Another benefit of living in a house instead of an apartment is that you're generally not living in as close proximity to your neighbours. So you can enjoy your life without having to worry about disturbing your neighbours (or being disturbed by them).
Greater value. House prices grow faster, on average, than apartments. This means you can build wealth more easily just by owning a house.
Cons
Higher prices. Houses are almost always more expensive than comparable units in similar neighbourhoods. This means you either save a bigger deposit and borrow more or buy a house in a cheaper suburb.
Maintenance. Lawns need mowing, gutters need cleaning, trees need trimming and windows need washing. A house can be a lot of work. That's fine if you love DIY projects and gardening. If you don't, the extreme low maintenance aspect of apartment living is pretty appealing.
Higher costs (and more bills). Living in a house is generally more expensive than living in an apartment. You have more space to heat and cool, and more furniture and equipment to buy.
Owning a unit or apartment means less maintenance, but you have the extra cost of strata or body corporate fees. And your neighbours live just one wall, floor or ceiling away.
Pros
More affordable. While there are some exceptions to the rule, apartments are generally cheaper to buy than houses. According to figures from Domain Group in September 2021, Sydney's median house price was $1,499,126. The median apartment price was just $802,475. For Melbourne, the median house price was $1,037,923 and the median unit price was $576,879.
Less maintenance. You don't have to mow the lawn or tend to the garden when you own an apartment. There's also the fact that there are plenty of maintenance tasks that can be looked after by strata, meaning you have more free time to do whatever you want.
Low cost. While the reduced space of apartments can be a drawback, it also results in cheaper electricity and gas bills.
Location. Many apartments are built near city centres, allowing you to live closer to everything, from transport and schools to restaurants and even your work.
Extra facilities. Owning an apartment might also give you access to a whole host of building facilities. There could be a pool, gym, tennis court, playground and even a shared garden. These added inclusions need to be taken into account when deciding whether to buy an apartment or a house.
Security. Thieves often have to pass through several layers of security to get to your apartment door, which isn't the case with many houses.
Cons
Strata/owners' corporation by-laws. Living in an apartment means abiding by the rules imposed by the owners' corporation, such as not hanging washing over the balcony or not having pets in the property. If you want to renovate or upgrade your apartment, you may need to seek approval first.
Fees. You'll also need to pay a fee to the owners' corporation to cover shared maintenance costs, so remember to take this into consideration when calculating total costs.
Less space. Apartments don't offer as much living space as houses.
Less privacy. If you don't like listening to your neighbours fight, entertain guests or get up to anything else in the privacy of their own home – or the fact that they can probably hear you doing the same things – apartment living may not be for you.
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To make sure you get accurate and helpful information, this guide has been reviewed by John Pidgeon, a member of Finder's Editorial Review Board.
Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio
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With over 20 years of experience in property, finance and investment journalism, Sarah is a trusted expert whose insights regularly appear across television, radio, and print media, including Sunrise, ABC News, and Yahoo! Finance. She has previously served as managing editor for Your Investment Property and Australian Broker, and her expert advice has been shared over 2,500 times in 2023-2024 alone. Sarah holds a Bachelor’s degree in Communications and a Tier 1 Generic Knowledge certification, which complies with ASIC standards. See full bio
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Hi there,
I have a fully paid off house (was my late uncles) that was gifted to me after his passing.
There is nothing owing on the house and it is fully in my name as per the deeds.
If i was to use the house as leverage to buy another place would the same methods for home loan lending still apply or is there another loan i need to take?
Finder
RebeccaSeptember 30, 2022Finder
Hi Sam,
If you plan to use your house’s equity to acquire a second home, there are several ways that you can finance it. This includes refinancing, taking out a line of credit, or using savings from an offset account as a deposit and taking out a new loan.
You can also talk to a mortgage broker about your specific circumstances and they’ll be able to walk you through your options.
All the best,
Rebecca
DeborahMarch 11, 2019
What lenders can I approach for a loan to purchase in an over 50s community? I have 50% of the home cost from the sale of my house.
Finder
JoshuaMarch 11, 2019Finder
Hi Deborah,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
While I am unable to provide you a specific recommendation, you may refer to our list of the latest home loans. You can use our comparison table to compare offers based on the interest rate, fees, monthly repayment, to name a few. Once you are done comparing, click on the “Go to site” green button of your chosen lender. It should redirect you to the official website of the lender where you can get more information to start your online application.
Moreover, you can also seek the help of mortgage brokers. They have the necessary knowledge and experience to help you explore your options.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
JasonJune 18, 2017
My wife and I want to purchase a house. We currently have a mortgage in our current place. Ideally we only wanted to be in it for 2 years then buy a house. We currently have 7 investment properties. I was told due to APRA and it will be hard for us to get a house loan to purchase a house. Are there people that could help in our situation?
JonathanJune 18, 2017
Hi Jason!
Thanks for the comment.
You can reach our to mortgage brokers for a personalized advice on this matter.
Hope this helps.
Cheers,
Jonathan
peterDecember 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 finalise all paper work and settlement day, in this respect do i guess have to organise a bridging loan? uncertain as to how much?
Finder
ShirleyDecember 2, 2014Finder
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.
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
NikkiJune 26, 2014
Do you have the trail commission percentages from the different banks when they pay the broker?
Finder
ShirleyJune 27, 2014Finder
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.
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Hi there,
I have a fully paid off house (was my late uncles) that was gifted to me after his passing.
There is nothing owing on the house and it is fully in my name as per the deeds.
If i was to use the house as leverage to buy another place would the same methods for home loan lending still apply or is there another loan i need to take?
Hi Sam,
If you plan to use your house’s equity to acquire a second home, there are several ways that you can finance it. This includes refinancing, taking out a line of credit, or using savings from an offset account as a deposit and taking out a new loan.
The steps may slightly vary depending on the option you choose. You may visit Using your equity to buy a second home guide to learn more.
You can also talk to a mortgage broker about your specific circumstances and they’ll be able to walk you through your options.
All the best,
Rebecca
What lenders can I approach for a loan to purchase in an over 50s community? I have 50% of the home cost from the sale of my house.
Hi Deborah,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
While I am unable to provide you a specific recommendation, you may refer to our list of the latest home loans. You can use our comparison table to compare offers based on the interest rate, fees, monthly repayment, to name a few. Once you are done comparing, click on the “Go to site” green button of your chosen lender. It should redirect you to the official website of the lender where you can get more information to start your online application.
Moreover, you can also seek the help of mortgage brokers. They have the necessary knowledge and experience to help you explore your options.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
My wife and I want to purchase a house. We currently have a mortgage in our current place. Ideally we only wanted to be in it for 2 years then buy a house. We currently have 7 investment properties. I was told due to APRA and it will be hard for us to get a house loan to purchase a house. Are there people that could help in our situation?
Hi Jason!
Thanks for the comment.
You can reach our to mortgage brokers for a personalized advice on this matter.
Hope this helps.
Cheers,
Jonathan
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 finalise all paper work and settlement day, in this respect do i guess have to organise a bridging loan? uncertain as to how much?
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.
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
Do you have the trail commission percentages from the different banks when they pay the broker?
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