Home Buying Guide Step 3: Choose a property type

home buying guide property type check 3

Doing some research and groundwork is essential when deciding on the right property type for your next purchase.

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.

From understanding the structural integrity of a property, to identifying your borrowing capacity, deciding on the property type and defining your property checklist, being smart about your property research and inspections can help you make an informed decision about the property type that will suit your lifestyle.

Here are some things to keep top of mind when deciding on property type.

Property considerations

When determining the value of different properties in your chosen suburb, there are many things to consider:

Structural integrity

One of the most important issues to think about when evaluating different properties is the structural integrity and quality of the build. When reviewing the structural integrity of the property, make sure you enquire about plumbing, electrics, insulation, materials in the structure and any existing damage (if it’s an established property).

To help you understand whether the property is structurally sound, you should organise building and pest inspections to pre-empt any issues that may appear further down the track, (remember that inspections should only be organised if you have a strong intention to purchase the property, as you will have to pay for each inspection you request).

A building inspection should be conducted by a qualified professional before you sign the contract of sale. This inspection involves checking that the building is structurally sound and ensuring that it conforms to Australian building codes. Qualified inspectors can look beyond cosmetic repairs and identify unsafe structures which can lessen the risk of unforeseen damages down the track.

On the other hand, a pest inspection is designed to detect the existence of termites and other pests and identify any damage that they have caused. If pests are present, then the pest inspection can determine what treatment is required.

Keep in mind that pest inspections may not be as critical if you’re purchasing an apartment as the strata report will outline any recent treatment of the building as well as any other strata-related issues.

Building materials

The building materials used within the property will help you evaluate the quality and durability of the structure. Take time to inspect the floors as well as the fixtures and fittings to make sure that you’re satisfied with the quality of material.

In particular, you should check to see if asbestos or any other hazardous materials such as lead or fumes exist in newly painted walls or fittings.

Size

Irrespective of the type of property you choose, you’ll need to have an idea of the 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? Do you need a study if you plan to work from home?

Think about your lifestyle needs and the property size that will allow you to live comfortably. This will help you determine whether you need a 2-bedroom or 3-bedroom property, as well as whether you need additional rooms such as a living room, a baby’s room or an outdoor entertaining area.

Generally speaking the larger the property size, the higher the purchase price and the higher the ongoing maintenance bills, such as utilities and insurance.

Landscape

The landscape and kerb appeal of the property is an important consideration for many homebuyers as it can influence the functionality and value of your asset.

Take note of the condition of the outdoor area including the driveway, fencing and landscaping, and also consider how this will fit into your lifestyle needs. If you have young kids or pets, is there enough backyard space to accommodate? If you like entertaining, is there an outdoor BBQ area or swimming pool? Is there appropriate fencing for any current or future children or pets especially if there is a pool? Will you have time to maintain the pool in any case? If you own a vehicle, is there parking space?

It’s worth thinking about ways to spruce up the outdoor area and kerb appeal of the property in order to boost the sell-ability factor of your future home.

Renovation potential

If a future renovation is on the cards, and you’re thinking of buying an established dwelling, then you should determine the renovation potential of the property. You should speak to local buyer’s agents and real estate agent’s about the type of renovation activity that will add the most value to your property within the given area.

It’s worth checking to see if any building or planning restrictions or environmental regulations apply to the property (and suburb) so you know whether you can conduct a cosmetic upgrade or major renovation in future. Again, see if the property consists of asbestos as this will be highly expensive to remove should you plan to renovate.

Eco-friendly

Solar panels

Many homes are now being built with the environment in mind and thus you may be conscious of the sustainability and efficiency of the property. For example, you may want to consider whether the landscape has been designed to minimise water usage, whether energy efficient lighting is used throughout the home, and whether ceilings and walls are insulated (to reduce heating and cooling expenses).

Enquire about the heating and cooling methods used in the property and ask about the associated bills such gas and electric. This will help you get an idea of the energy costs for the property so you can factor these ongoing costs into your budget.

Check to see if the property has double glazing as this can affect your security and energy usage when occupying the property. Double glazing can also be useful in terms of managing the property temperature, noise pollution and minimising UV damage (particularly if you have a north-facing property that gets a lot of sunlight).

Design

Your preferred design of the property will depend on your personal taste and preferences. Do you seek a newly renovated and modern apartment? Or would you prefer a ‘fixer-upper’ so you can add your own personal touch? Are you after a Scandinavian or industrial design? Or do you want something more minimalistic? Speak to architects and designers and do some research to think about the style of home that you’re looking for.

It’s worth noting that the kerb appeal of the property- such as the pathway, fencing and landscaping- can play a role in shaping the ambience of the property and adding value.

Observe the quality and condition of the property’s kerb appeal and think about whether there are any value-adding opportunities that you could leverage down the track.

Climatic conditions

While you may have already discovered any relevant climatic conditions in your previous suburb research, it’s important to think about how weather conditions may affect your property. If you purchase a property near the ocean you should think about the materials used to avoid corrosion from salt water and air. For example, you may want to be cautious about buying a property with metal structures or a lot of glass as the sea spray can damage metal.

Additionally, consider whether the property is vulnerable to any extreme weather conditions such as flooding and bushfires to make sure you have an emergency plan in place to protect the safety of your family. If you’re unsure, speak to the local council.

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Affordability

You shouldn’t start inspecting properties unless you have an idea of how much you can afford, and your property price range.

Although you would have looked into this already when reviewing if you can afford to purchase it never hurts to re-check. Speak to an accountant and a mortgage broker as they can sit down with you to help you devise a budget and work out how much you may need to borrow in order to finance the purchase. They can also help you understand the upfront and ongoing costs of owning a home.

A good way to prepare for homeownership is to practice living off your budget 3-6 months prior to taking out a loan. You can set up an extra savings account to transfer the estimated mortgage repayment amount, rates and other associated costs. For instance, if you work out that your monthly mortgage repayment will be $2,500 and rates will be $800 per month, then you should put aside at least $3,000 each month.

This will help prepare you for homeownership. It will also allow you to have a nice buffer for any unexpected costs when you buy or even just that special piece of furniture you want in your new place.

Use our calculator below to work out how much you can afford to borrow.

Once you have an idea of your price range, you can start inspecting properties and consider applying for pre-approval with a lender to up your negotiating power. This will ensure that you only look at properties that fall within a given range.

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Property types

The type of property you decide to purchase will largely depend on the area in which you choose to reside as well as your lifestyle. If you’re a young professional, you may want to think about purchasing a studio apartment, whereas if you’re a family, then a house with a backyard may be a more appropriate property choice.

Many Australians face the dilemma of deciding between a new or an established property. Below we outline the pros and cons of each.

New property

New Homes

Pros
  • Low maintenance. When you purchase a new property, you can benefit from the convenience of not having to spend money on major repairs or ongoing maintenance too soon after purchase.
  • Ambience. Newly established properties are often equipped with modern technologies and contemporary designs, such as underfloor heating, which can improve your quality of living.
  • Government incentives. There are stamp duty concessions and grants available for first home owners when buying a newly established or off-the-plan dwellings which could significantly increase your financial position.
Cons
  • Less affordable. Depending on the location and property type, new properties are typically more expensive than established dwellings. In addition, new apartments or units often have high strata fees associated with maintaining communal facilities such as gyms and pools.
  • Limited value-adding potential. There is little opportunity to renovate or add value to the property once you’ve purchased it, so it may take longer to achieve capital growth.
  • Off-the-plan issues. Many borrowers are purchasing new properties off-the-plan due to various tax and depreciation concessions, but these types of purchases can lead to problems such as developer’s going bankrupt and changes in lender’s policies.

Established property

Established homes

Pros
  • Renovation potential. A benefit of buying an established property is that you can renovate and add value to the property which can boost your equity over time. This allows you to add your own personal touches to the property and alter the property to maximise space and functionality. Some renovation expenses may be tax deductible.
  • Affordability. An established property is generally more affordable than a new property which means that you may be able to complete a larger deposit or you may be at less risk of facing mortgage stress levels.
  • Negotiating power. When you buy an established or outdated property, you have the ability to negotiate for a fair price. If you’re inspecting a property and you notice issues, you can use this to ask for a price reduction. Vendors of established properties often have a motivation to sell relatively quickly so you can use this to your advantage to secure a discounted price.
Cons
  • Maintenance. An older property may require upgrades and repairs due to wear and tear so you’ll need to have a contingency buffer to cover unexpected expenses that may arise.
  • Less appeal. Established properties typically have less appeal than new properties as they may have an outdated design, but remember that once you own it you can change it.

Apartment vs house

From granny flats, town-houses and studio apartments, there are many different property types available to Australian homeowners. However, many people face the difficult choice of whether they should buy an apartment or a house.

Apartment

Apartments

Pros
  • Lower cost. Apartment living is generally less expensive when it comes to utility bills such as water, electricity, heating and cooling.
  • No maintenance. For most apartments, building maintenance is taken care of by the body corporate which means you don’t need to worry about organising or paying for major maintenance issues only the ones within your apartment.
  • Amenities. Apartments can have a range of amenities that you can use such as a communal BBQ area, a swimming pool, gym and dedicated parking space.
Cons
  • Smaller space. Apartments are typically smaller than houses which means you have a more contrived living space.
  • Privacy and noise. Due to the crowded nature of apartments, the privacy afforded by apartment living is less than that of living in a private house. Also you share walls with your neighbours so there is a higher amount of noise pollution.
  • Personalisation. As the apartment building is controlled by the body corporate, the extent to which you can personalise or upgrade your apartment is limited. For instance, you may not be able to repaint walls or change existing fittings, and you may not be able to hang clothes out on the balcony.

House

House

Pros
  • Personalisation. When you purchase your own house, you have the liberty to decorate, design and renovate it as you like, which can help boost the value of your asset.
  • Space. Houses are typically larger than apartments which means you have the flexibility and comfort to use the space to your advantage.
  • Flexibility. When you reside within a house, you don’t have to answer to a body corporate and therefore you have greater flexibility with the way you want to live. For instance, you can have pets or the freedom to conduct a cosmetic renovation (subject to council regulations) without having to seek permission.
Cons
  • More expensive. Generally speaking, houses are more expensive than apartments which means you’ll need to come up with a larger deposit (ideally 20% of the purchase price to avoid paying lender’s mortgage insurance). Houses also have higher ongoing maintenance, utility and insurance costs.
  • Maintenance. A house requires ongoing cleaning and maintenance which can be costly and time-consuming. You are also solely responsible for this maintenance both inside and outside the property rather than having it taken care of by strata or your body corporate.
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Property checklist

When creating your property checklist, you need to separate the essential features from the non-essential features. Make a list of everything you want from the property such as the number of bedrooms, the appearance of the home and the price range.

The property checklist will come in handy when filtering your research on real estate websites, so keep this top of mind.

Do you need a two-story family home with multiple bedrooms? Or are you looking for a one-bedroom apartment with designated parking space? Ideally, your property checklist will help you choose a property that reflects your lifestyle needs.

The below is an example of how you can decide on the type of features you’d like to have in a newly established home, separated by room:

Room (quantity)Must-havesNice-to-haves
Bathrooms ( x 2)
  • Storage (e.g. cupboards)
  • Mosaic floor tiles
  • 2 x power points
  • 1 x shower
  • 1 x bath
  • Vanity type
  • Heated towel rail
  • Dual shower head and pressure control
  • Dual sink (‘his’ and ‘hers’)
  • Wall tiles
Master bedroom ( x 1)
  • 1 x ceiling fan
  • Ensuite
  • Timber floorboards
  • Pay TV connection
  • North-facing window aspect
  • Built-in wardrobe
  • Air conditioning
  • Double-glazed windows
Outdoor/landscape
  • Gas BBQ
  • Sealed driveway
  • Timber fence
  • Double garage
  • North-aspect of front garden
  • Outdoor lighting
  • Pergola
  • Swimming pool
Kitchen ( x 1)
  • Gas cooktop
  • Wooden floorboards
  • Gas oven
  • Rangehood
  • Dishwasher
  • Butler’s pantry
  • Smoke detectors
  • Task lighting
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Property inspection tips

Visiting and inspecting properties is a vital part of the home buying process that can help you decide whether or not a property is right for you. Here is some advice about how to get the most out of your property inspections (particularly when you’re viewing and comparing several properties).

Bring your checklist with you

To compare different properties with ease, you should bring your property checklist with you to open inspections, and make detailed notes about each property. This will quickly reveal how each property stacks up against your requirements.

As mentioned above, observe the structural integrity of the property, the quality of the materials used throughout, the landscape, and any other elements that are important to you. If you notice any existing damage such as cracks on the walls or chips in the paint, it’s worth noting this down too.

You may want to rank the properties from 1-5 based on how well they score for each of your needs (where 1 = very strong match, and 5 = very poor match).

Attention to detail

If you’re inspecting a property that will be sold unfurnished, you may want to think about the bulky items that you will need to fit into the space, such as a fridge and furniture. Write down the measurements of your items to see whether they would fit into the available space of the property.

Take some snaps

After inspecting a few different properties, the details may become hazy. This is why you should request to take photos of the exterior and interior of the property so that you maintain a visual record of each property for comparison.

Visit the property day and night

If you’re interested in a property and you’re returning for a second visit, make sure you return at a different time of day compared to your initial visit. This will help you get a feel for what the property looks (and feels) like during day and night. It will also give you an idea of the time of day that the property receives a lot of sunlight and highlight any potential noise issues at night.

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Now that you’ve evaluated the type of property you’d like to buy, move on to Section 4 of the Home Buying Guide: Comparing Finance Options.

Skip ahead and start comparing loans now

Rates last updated December 16th, 2017
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Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.69%
4.86%
$0
$395 p.a.
90%
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.62%
3.62%
$0
$0 p.a.
80%
A discounted, competitive variable rate loan with limited fees.
3.64%
3.67%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.64%
3.67%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.54%
3.56%
$0
$0 p.a.
80%
For new home buyers only. No refinance option. A low interest variable home loan with no application fee and free redraws. Offer ends 2 January.
3.65%
3.66%
$0
$0 p.a.
90%
A competitive variable rate home loan with no application fee.
3.69%
3.69%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application fee or ongoing fees with this loan.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
A low interest rate home loan that allows borrowers to borrow up to 80% of the property value.
3.78%
3.78%
$0
$0 p.a.
80%
A basic low-rate home loan that still offers some useful features.
3.69%
4.01%
$0
$299 p.a.
95%
A loan with no application fee and borrow up to 95% LVR.
4.09%
4.11%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.74%
4.15%
$0
$395 p.a.
80%
Enjoy a discount of a competitive interest rate and 100% offset account.
4.14%
4.14%
$0
$0 p.a.
80%
An investment home loan with competitive rate and 100% offset account.
4.39%
4.42%
$0
$0 p.a.
80%
An interest-only loan for investors. Access equity to further your investment opportunities.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
4.34%
4.87%
$0
$0 p.a.
80%
Lock in a low 2-year fixed rate with this interest-only investment loan.
3.69%
4.15%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.99%
4.00%
$0
$0 p.a.
80%
A low-fee variable rate investor loan with a fast online application process.
3.71%
3.74%
$600
$0 p.a.
80%
A maximum 80% LVR home loan with no ongoing service fees and a linked transaction account.
3.65%
4.19%
$500
$0 p.a.
95%
Get a discounted fixed interest rate for the first 12 months while you settle into your new loan.
4.64%
4.01%
$0
$0 p.a.
80%
Enjoy a fast application process and flexible repayment options with this fixed rate investment loan.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
4.79%
5.44%
$0
$395 p.a.
90%
Package your 4-year fixed rate investment loan and pay no application fees.
4.09%
4.11%
$0
$0 p.a.
80%
Pay no application fee on this low variable rate investment home loan.
3.79%
4.11%
$0
$299 p.a.
80%
A fully featured home loan with an offset account and discounts available.
3.96%
3.98%
$0
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.95%
4.99%
$300
$10 p.a.
95%
A flexible, competitive fixed rate loan that allows for extra repayments.
3.94%
4.88%
$0
$0 p.a.
90%
Enjoy a low interest rate and borrow up to 90% (with LMI) of your property's value.
3.73%
3.73%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.85%
4.18%
$500
$0 p.a.
95%
Apply for Easy Street fixed rate home loans and get a competitive loan with a fixed interest rate.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.99%
3.99%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
3.97%
3.97%
$0
$0 p.a.
90%
A competitive variable rate home loan with no ongoing fees.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.84%
4.83%
$0
$0 p.a.
95%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.74%
3.74%
$0
$0 p.a.
95%
A low rate home loan with no application or ongoing fees. Loan comes with 1 year of free home and contents insurance. Note that to be eligible for this loan you must be QLD resident.
4.09%
4.25%
$300
$10 monthly ($120 p.a.)
80%
Get a competitive investment home loan rate without expensive features you may not need.
3.99%
4.02%
$600
$0 p.a.
90%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.99%
4.77%
$0
$0 p.a.
95%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.68%
3.69%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
3.87%
3.92%
$0
$0 p.a.
90%
A discounted interest rate home loan with no monthly fees.
3.87%
3.87%
$0
$10 monthly ($120 p.a.)
90%
Get a competitive interest rate for 3 years and a discounted variable rate when the fixed period ends.
3.79%
3.80%
$0
$0 p.a.
80%
A competitive rate with no ongoing monthly fees or application fees.
3.69%
3.69%
$0
$0 p.a.
70%
Enjoy a low variable rate with no application and ongoing fees.
3.88%
4.88%
$0
$395 p.a.
95%
Lock in a discounted fixed rate with a low service fee.
3.99%
4.03%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.85%
4.95%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Borrow up to and fix in a 3 year home loan rate. Access your account via internet and phone banking.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
5.29%
5.64%
$995
$15 monthly ($180 p.a.)
65%
Available for former bad credit borrowers who have had a clean credit file for the last 24 months. Loan can be used to purchase a property or refinance.
3.59%
4.42%
$0
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.
5.59%
5.94%
$995
$15 monthly ($180 p.a.)
55%
Available for borrowers with bad credit history. Can be used for purchase or refinance even with negative listings on your credit file.

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Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

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