Process of buying a house

Loan approval

It is a good idea to get pre-approval from your loan provider before making any offers on a house
Sometimes brokers can get you a better interest rate but do your own research to compare
You are best to save a 20% deposit if you can. You will:
- Get a better interest rate with a higher deposit
- Avoid paying Lenders Mortgage Insurance (LMI)
- Pay less in the long run
Buying off the plan is something you do before construction is complete
Loan providers will often lend you more than you need, but look at what you can afford so you can still save and continue paying your mortgage if interest rates increase.
Use the home loan repayments spreadsheet on the housing page of this website to work out what you can afford now and if interest rates increase. Many websites and home loan lenders also have borrowing power calculators on their websites that you can use to estimate how much they will lend you based on your individual situation.

Buying a house

You can see previous sales and estimated value through websites such as On the House
You can usually register your name with local real estates in the area on their buying database, so when a property comes up they will contact you - they don’t always put them online (e.g. Realestate.com.au) and some people buy the property before they are even advertised. They might be able to give you sales reports for the area as well
Ask the real estate agent whether any extensions, swimming pools and other building developments have council approval before you put in an offer. The real estate agent might declare this to you if they are aware, or otherwise, it will come up as part of the conveyancing process.

Units, townhouses and strata

There are additional ongoing fees that you have to pay if you purchase some properties such as an apartment / unit or townhouse. This is to maintain common areas of the property such as driveways, gardens, stairs, the exterior of the building and insurance costs.

House and land packages

If you are buying land which is an untitled lot, it has not yet been registered with the local council and you need to wait for the certificate of title to be issued. This can take some time and affect the settlement date of your loan as well as delay when the building of your house can commence
Some packages may not include extras such as landscaping, fencing, driveways and additional costs if you want to change any standard fittings and materials
Ask for a detailed breakdown of the costs and check that your contract lists everything that you agreed upon before signing.

Making an offer

If you make an offer, give the contract of sale to your solicitor/conveyancer to look over and then make a 0.25% deposit. Any included fittings such as curtains, blinds, light fittings, awnings, air conditioning units or TV antenna should be listed to avoid disputes at or after settlement
You often have a 5 day cooling off period. You will forfeit 0.25% of the purchase price if you cancel during this period. (E.g. purchase price of $800,000 would forfeit $2,000)
- This is when you arrange the pest and building inspection, so if there are any major issues you can cancel the purchase (your conveyancer may have a contact for you to use)
At the end of your cooling off period, you are required to pay the remaining deposit to make up 10%.

Auctions

There is no cooling off period for auctions and you are bound by contracts on the day. Therefore, you need to arrange loan approval, pest and building inspection and 10% deposit prior to the auction.

Settlement

Settlement period is usually about 6 weeks, unless a longer period is requested by either party. During this period you will need to receive full unconditional approval from your loan provider
You must get house insurance on the property during the settlement period. Your loan provider needs this to approve your loan. Contents insurance is also recommended after you move in
Do a final inspection the day before settlement to ensure the house is in good order and everything has been removed. The conveyancer will do a final search of the title to ensure there are no restrictions that have arisen in the settlement process
Make sure you double check the settlement report that you get from the conveyancer and that there are no errors (e.g. loan term, interest rates)
Certified copies of birth certificates / drivers licences may be needed as part of settlement and for your loan approval
You may like to contact your internet, gas and electricity providers prior to moving in so everything can be set up ahead of time.

Types of loans

Fixed or variable

Fixed loans are usually for a few years and then reverts to a variable rate. This variable rate is usually a higher variable rate than if you went variable in the first place, however, you can negotiate this after the fixed rate period is over. The rate does not change during the fixed period and you can not make any extra payments to your loan
Variable rates fluctuate depending on the Reserve Bank of Australia (RBA) or if the banks increase the rate themselves. This option allows you to make extra payments and reduces the interest you are paying even further

Variable and offset account loans

An offset account is an additional account linked to your variable rate home loan. The money in this account reduces the interest payable on the loan. It is a freely accessible account and usually has a slightly higher interest rate for your home loan
- E.g. if your loan is $700,000 but you have $50,000 in your offset account, then you will only pay interest on $650,000
If you have a variable rate home loan but do not have an offset account, you can put your savings directly into your mortgage. You can redraw the money out if needed which can take a few days or so, depending on your home loan lender. This is usually free but check the fees and charges from your loan provider.

Fees to pay in addition to your deposit

Deposit is usually 10% to secure the property. You can organise a bank cheque and give this to the real estate or liaise with your bank if they need to transfer any money to the real estate, depending on how much money you are borrowing
You will have to pay lenders mortgage insurance (LMI) if you have a deposit less than 20%. It can be quite substantial but it differs between loan providers
- 5-10% of the purchase price may be acceptable to some lenders depending on the type of home being purchased
- LMI can be added to the loan but then you will be paying more with your repayments
Conveyancer fees
Building and pest inspection (often organised by your conveyancer)
Pro rata fees
- This may include council rates, water rates, cheque fees, stamping fees and settlement fees.

Stamp duty / transfer duty

Costs differ from state to state and also depends on the purchase price of the property. Further information is available at the links below.
- NSW
- ACT
- QLD
- VIC
- SA
- NT
- WA
- TAS
Must be paid within a certain timeframe of settlement depending on the state, but is often paid at the same time as the final settlement
Concessions may apply for first home buyers.

Government grants

Each state and territory has their own conditions on whether you are eligible for the First Home Owner grants and other concessions. To find out more, visit the links below.
- NSW
- ACT
- QLD
- VIC
- SA
- NT
- WA
- TAS

Process of buying a house

Buying a house

You can see previous sales and estimated value through websites such as On the House

Ask the real estate agent whether any extensions, swimming pools and other building developments have council approval before you put in an offer. The real estate agent might declare this to you if they are aware, or otherwise, it will come up as part of the conveyancing process.

Units, townhouses and strata

There are additional ongoing fees that you have to pay if you purchase some properties such as an apartment / unit or townhouse. This is to maintain common areas of the property such as driveways, gardens, stairs, the exterior of the building and insurance costs.

House and land packages

If you are buying land which is an untitled lot, it has not yet been registered with the local council and you need to wait for the certificate of title to be issued. This can take some time and affect the settlement date of your loan as well as delay when the building of your house can commence

Some packages may not include extras such as landscaping, fencing, driveways and additional costs if you want to change any standard fittings and materials

Ask for a detailed breakdown of the costs and check that your contract lists everything that you agreed upon before signing.

​

Making an offer

If you make an offer, give the contract of sale to your solicitor/conveyancer to look over and then make a 0.25% deposit. Any included fittings such as curtains, blinds, light fittings, awnings, air conditioning units or TV antenna should be listed to avoid disputes at or after settlement

You often have a 5 day cooling off period. You will forfeit 0.25% of the purchase price if you cancel during this period. (E.g. purchase price of $800,000 would forfeit $2,000)

This is when you arrange the pest and building inspection, so if there are any major issues you can cancel the purchase (your conveyancer may have a contact for you to use)

At the end of your cooling off period, you are required to pay the remaining deposit to make up 10%.

Auctions

There is no cooling off period for auctions and you are bound by contracts on the day. Therefore, you need to arrange loan approval, pest and building inspection and 10% deposit prior to the auction.

Settlement

Settlement period is usually about 6 weeks, unless a longer period is requested by either party. During this period you will need to receive full unconditional approval from your loan provider

You must get house insurance on the property during the settlement period. Your loan provider needs this to approve your loan. Contents insurance is also recommended after you move in

Do a final inspection the day before settlement to ensure the house is in good order and everything has been removed. The conveyancer will do a final search of the title to ensure there are no restrictions that have arisen in the settlement process

Make sure you double check the settlement report that you get from the conveyancer and that there are no errors (e.g. loan term, interest rates)

Certified copies of birth certificates / drivers licences may be needed as part of settlement and for your loan approval

You may like to contact your internet, gas and electricity providers prior to moving in so everything can be set up ahead of time.

Types of loans

Fixed or variable

Variable rates fluctuate depending on the Reserve Bank of Australia (RBA) or if the banks increase the rate themselves. This option allows you to make extra payments and reduces the interest you are paying even further

Variable and offset account loans

An offset account is an additional account linked to your variable rate home loan. The money in this account reduces the interest payable on the loan. It is a freely accessible account and usually has a slightly higher interest rate for your home loan

E.g. if your loan is $700,000 but you have $50,000 in your offset account, then you will only pay interest on $650,000

Fees to pay in addition to your deposit

Deposit is usually 10% to secure the property. You can organise a bank cheque and give this to the real estate or liaise with your bank if they need to transfer any money to the real estate, depending on how much money you are borrowing

You will have to pay lenders mortgage insurance (LMI) if you have a deposit less than 20%. It can be quite substantial but it differs between loan providers

5-10% of the purchase price may be acceptable to some lenders depending on the type of home being purchased

LMI can be added to the loan but then you will be paying more with your repayments

Conveyancer fees​

Building and pest inspection (often organised by your conveyancer)

Pro rata fees

This may include council rates, water rates, cheque fees, stamping fees and settlement fees.

Stamp duty / transfer duty

Costs differ from state to state and also depends on the purchase price of the property. Further information is available at the links below.

NSW​

Must be paid within a certain timeframe of settlement depending on the state, but is often paid at the same time as the final settlement

Concessions may apply for first home buyers.

Government grants

Each state and territory has their own conditions on whether you are eligible for the First Home Owner grants and other concessions. To find out more, visit the links below.

NSW​

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Conveyancer fees

NSW

NSW