How To Buy A House In Australia Explained: A Complete Guide

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Students want to know how to buy a house in Australia for the first time.


Are you on the lookout for a home but need more time due to the complex process? Then, this guide is for you.


Having your own home is a dream of almost every person. The Australian real-estate sector presents solid returns and stability that attract locals and overseas investors to invest in the country.

We have compiled a complete list of steps to buy a house in Australia to make home-buying easy, painless, and exciting.



1. Reasons To Settle In Australia


Several people aspire to buy a property in Australia for many reasons:


  • Good quality of life, international cities, low cost of living, and a strong economy are prominent reasons people settle in the country.

  • The natural beauty comprises spectacular beaches and reefs in Queensland, the splendid coastline in Victoria, the distinguishing outback experience of the Northern Territory, and the coasts of New South Wales appeal to everyone.

  • Globally renowned universities 

  • Affordable housing prices

  • Strong employment opportunities

  • Stable prices, low risk, and good capital returns make it a safe and lucrative property market.

  • Tax benefits

  • Consistent annual growth performance, property prices doubling almost every 7 to 10 years.

  • Government home grants and easy qualifications for home loans

  • Responsible loan lending regulations through the Australian Prudential Regulation Authority reduce volatility in asset prices.

  • A relatively easy home-buying process that doesn't require earning citizenship or setting up your company in Australia.



2. What Costs Do You Incur When Buying A House In Australia?


Once you have decided to own a house in Australia, the next step is to analyse your financial position and the possible expenses associated with buying a home. Here is the rundown of the list of costs that you may incur:



  • Stamp Duty Tax: The exact amount of this tax depends on the state where you live and the buying price of a property.


  • Legal Fees: Buying a home involves the preparation of legal documents related to property registration, transfer of title, and other lawful checks. Set aside $1.000 to $3.000 for the execution of these legal tasks.


  • Insurance and Finance Costs: Valuations, Settlements, Filing a mortgage application, Paying the LMI (Lenders Mortgage Insurance) fee when borrowing over 80% of the house purchase price.


  • FIRB (Foreign Investment Review Board) Approval Fees: The charge varies based on the property value and your citizenship status, i.e., a temporary resident or an overseas investor without an Australian visa.


  • Home Inspection Cost: Before you go ahead and carry out house-buying formalities, it is essential to perform a thorough inspection of the building and home for any pest infestation, structural deformities, etc. Getting the house inspection done in advance gives you the mental peace and assurance that the property is pest free and structurally sound.


  • Buyer's Property Agent Fee: The fee is usually a certain percentage (2%) of the house purchase price.


  • Miscellaneous costs: Ongoing mortgage repayments, Shifting costs, Utility bill payments, Strata fees, Land tax, Council and water rates, Home and building insurance, Body corporate fees, Property management charges, Mortgage protection insurance, House repairs and maintenance 


To be safe, you should put aside approximately 5% of the purchase price to bear the expenses linked to the property purchase.



3. Steps To Buy A House In Australia


Buying a house is one of the most challenging and life-changing decisions you will ever make. It requires considering a multitude of factors to get the best deal. 


Here is a 10-step guide to help you buy your dream house in Australia:



Step 1: Assess The Present Situation


Start by evaluating your readiness for purchasing a house before taking steps in this direction. Evaluate the number of dependents, job security, and lifestyle to determine your borrowing capacity and the kind of property you can purchase.


Most Australian lenders prefer candidates with a minimum of 12 months of experience in their present job as they present a low risk to them.



Step 2: Check Your Finances


Look at your current financial situation and assess your immediate, short-term, and long-term goals. Set aside adequate funds to meet your financial goals and identify free funds that you must have to invest in the property.


As a mortgage is a huge financial responsibility, carefully plan how much you can afford monthly to pay for mortgage repayments. Mortgage calculators are easily accessible online that calculate the mortgage amount based on the following factors:


  • Existing debts and financial commitments

  • Income 

  • House deposit and any current savings

  • Credit score and credit report

  • Associated home-buying costs

  • Deposit

  • Upfront and moving costs


You can also apply for a credit file copy and ensure you clear away debts. Reduce your credit card limit to qualify for a large finance amount. The assistance of an experienced accountant can help you assess your finances and decide on a realistic budget.


First-home buyers are eligible to receive the first home buyers grant. This is a national scheme run by the government to help buy a house in Australia. The grant amount varies per state. You should submit your application within one year of buying your first home in Australia.



Step 3: Decide On The Type Of Property You Want


When deciding on the right property to park your money on, numerous things come into play. The key to finding the perfect house is to strike a balance between lifestyle and affordability.


Considering the following factors can help you find the right one:


  • Structural integrity

  • Internal features such as layout, fittings, design, and outdoor space

  • Property size

  • Property type: House or unit

  • Location (proximity to schools, shops, services, hospitals, etc.) 

  • Capital growth prospects

  • Amenity

  • Community and Surroundings

  • Accessibility to Public Transport



Step 4: Compare Home Loans


The next step is to find the right home loan to realise your property goals. Borrowers seeking a competitive home loan should familiarise themselves with available home loans.


Several Australian mortgage providers provide home loans at competitive interest rates and product features. To identify the best loan, compare them on the following factors:


  • Interest Rate: Go with the low-interest rate offering, as it helps maximise your savings. 

  • Term of The Loan: Ideally, one should choose a home loan with a shorter duration over a longer duration to pay less money.

  • Fees: Comparing home loans based on their application fees, discharge fees, and ongoing fees. A home loan with fewer fees helps minimise your mortgage costs.

  • Features: Many loan lending firms offer enticing features that can help people save more money. Look at the loan pre-payment penalty and features such as redraw facilities, split loans, minimum regular mortgage repayments, salary crediting, and packaged discounts.



Step 5: Get Your Home Loan Pre-Approved


Securing pre-approval for a home loan even before you start searching for a home is beneficial to know your price range. There are three steps to execute this process:


  • Arrange all the necessary documents for the lender, such as credit reports, income statements, investments, and saving account details

  • Attend a loan interview

  • Verify documents and get loan approval


After successful approval, you may receive a 'pre-approval certificate' or 'home loan guarantee certificate'. Loan approvals are only valid for six months to one year. If the pre-approval expires, you may apply for an extension or re-application for the loan approval process.



Step 6: Start Your House Search


Finding a house is an exciting and thrilling experience. However, you should stick to your budget and analysis while on this journey.


Make practical and not emotional decisions. Attending private treaties and auctions is beneficial when buying a house for the first time in Australia.


When purchasing a property at auction, you may immediately require paying 10% of the purchase price as a deposit. You do not get any cooling-off period in this mode of purchase.


However, when you buy a property in private, the sale agreement includes the deposit amount and timeline to pay it. A short cooling-off period is in the written notice within which you can regain your maximum deposit on withdrawing the deal.



Step 7: Make An Offer


Once you are ready to buy the property, you can make an unconditional/conditional offer to the seller. 


Inform the lender that you have found the desired property and apply to finalise your home loan.



Step 8: Prepare For The Purchase


When finding the property that matches your vision, now is the time to conduct a property valuation. It will help you find out the exact price to offer.


After arriving at the right price, you will exchange contracts and pay the deposit. The sale agreement will list the following:


  • Names of parties involved in the deal

  • Address of the property

  • Buying price

  • Terms and conditions

  • Unique additions in the sale

  • Settlement date


The property seller will prepare a contract of sale. A buyer should perform a property inspection and talk to the seller, including taking the help of a legal expert/solicitor to review the contract before signing it. It will help avoid costly mistakes.



Step 9: Perform Building And Home Inspection


When performing the building inspection, you should examine the building for the following:


  • Structural issues

  • Damp

  • Floor conditions

  • Damaged wiring

  • Drain and plumbing issues 

  • Proper fitting of windows and doors

  • Mould

  • Sagging ceilings 

  • Repair/maintenance cost

  • Water flow in taps

  • The presence of termites and other pests


If you find any serious issues in the property, you can withdraw the agreement within the cooling-off period.



Step 10: Get Ready To Settle


After exchanging sale contracts, the settlement will happen on any day. This is the transfer process of the property title into your name and the start of your mortgage period.


The solicitor/ conveyancer finalises the settlement process with the seller and loan lender. Further, the buyer gets the keys to their new home. The settlement process includes costs, such as stamp duty charges and legal and conveyancing fees.



4. How Much Deposit Do I Need To Buy A House In Australia?


You must know the deposit amount well in advance when buying a residential property. The housing contract includes this amount. The two key factors determining the deposit amount are your financial condition and the housing market.


Traditionally, it is 20% of the property purchase price. Nowadays, a few banks and lending institutions even allow house buyers to deposit only 5% of the house sale price to buy the house.


This implies that if the property you wish to buy is $500,000, you must give a deposit amount of $100,000 (20% deposit) and $25000 (5% per cent).


Likewise, for a $700,000 property, you would need a deposit of $140,000 (20% deposit) and $35000 (5% per cent).



5. How To Buy A House In Australia As A Foreigner?


Australia is a great property investment destination attracting foreign investors' enormous interest. 


If you are one of them, here are the steps to follow to buy a dream property in this country.



Step 1: Find A Team Of Professional Associates


You would need a compliant, insured, and licensed conveyancer who can help you with the legal aspects of the purchase and the sale of real estate property.


Next, find a reputed mortgage provider with experience in real estate purchases by non-resident Australians. With a network of financing firms, they can help you with the maximum finance at attractive interest rates against your property price.


Look for an experienced accountant who can handle all financial aspects of the house purchase deal. An accountant can also help you structure your finances to save on tax.


Finally, find a property agent who can show you properties based on your requirements, budget, and preferences.



Step 2: Get Your Home Loans Pre-Approved


Australia is a high-demand and robust housing market where properties have a short shelf life. 


By getting the loan paperwork done well in advance, you can avoid unnecessary delays to fund a property that meets your expectations.



Step 3: Apply to Foreign Investment Review Board


As an overseas investor, you must seek Australian government approval to buy domestic property legally. 


You need to apply to FIRB in advance and get their approval.



Step 4: Start Property Search


With all the paperwork done, you can now start exploring properties to find the ideal one for your needs. 


You may have to negotiate with sellers to find a property within your budget.



Step 5: Finalise The Loan Approval


Even though you have a pre-approved home loan, the lending firm must finalise it. The lending firm will receive a copy of the loan agreement and assess it.



Step 6: Pay The Deposit Amount


After completing the above steps, you can exchange agreements with real estate agents and pay the deposit.



Step 7: Submit An Agreement Copy To FIRB


As a formality to the full and final completion of the deal, you must forward a copy of your house-buying agreement to FIRB for approval.



Step 8: Transfer Of The Right Of Ownership


Here we have come to the last step of the house-buying process, i.e., transfer of Ownership Rights. 


The conveyancer and mortgage provider will take care of this task. Collect the keys from the real estate agent and prepare for the move to your dream home.



6. How To Buy A House In NSW?


Buying a home may seem overwhelming, but it doesn't have to be. Follow this guide for an easy and comfortable transition:



  • Step 1: The first step to learning how to buy a house in Sydney is to assess your financial position. Calculate how much money you can invest, probable expenses, how much you can borrow, and available loan repayment options. This analysis will help on which properties to consider for buying and investment purposes.


  • Step 2: The next step is to determine the type of property (house, unit, apartment, or townhouse) you want. Specify the size, location in NSW, amenities, and other requirements that you look for in the house. With this mental preparation, you can begin your search for properties and thoroughly inspect the home and neighbourhoods.


  • Step 3: After viewing several properties, you may find a few of them that matches your criteria. When that happens, you should submit a written or verbal offer on those properties and request the estate agent to provide you with a copy of the property sale agreement. Carefully examine the deal as it lists the essential documents concerning the property. Get this agreement reviewed by a conveyancer to find any legal issues.


  • Step 4: Exchange the legal documents and sign them to execute a property-buying deal. Some of the essential tasks that you would require completing in this step are:


  • Evaluating and exchanging the sales contract

  • Arrange stamp duty and deposit payment

  • Prepare loan agreement

  • Evaluate outstanding payments on the property

  • Arrange for the transfer of property title



  • Step 5: When buying a house in NSW, you need to pay a 10% deposit of the agreed purchase price of the property. You get a 5-day cooling off after you exchange the sales contract to withdraw from the contract. When you have done the above steps, you can start preparing to move and repay the loan instalments.



7. Conclusion


Purchasing a home is one of the most significant one-time investments you will ever make. Therefore, you must conduct proper research, planning, and effort to start things right.


The above information and steps will make your house-buying process a breeze.


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