Australia is one of the most sought-after places to live, known for its stunning beaches, natural beauty, and wide-open spaces. With major cities like Perth, Melbourne, and Sydney, it’s easy to see why you’d want to buy a home here.
If you’ve been renting and feel ready to take the leap into homeownership, you’ll find the process in Australia is clear and doable, as long as you meet the basic requirements.
This guide will walk you through the steps to buying a home, including costs, cooling-off periods, property value, and the rules. Plus, we’ll cover how real estate agents can help you make it happen.
Is there a need for a real estate agent to purchase a house in Australia?
It is not entirely necessary to use a real estate agent to buy a house in Australia, but they can guide you through the home-buying process and find properties that meet your specific needs and budget.
Real estate agents have access to a wider range of properties for sale in the property market and can guide the legal and conveyancing fees of the purchase.
In addition, they can bargain for the best price on your behalf when purchasing the property. The decision to hire a real estate agent should be made solely on the basis of personal preference and practical considerations. While this may be, there are some values attached to using real estate agents.
Further Reading: If you’re keen to expand your real estate knowledge, don’t stop here! Discover the significance and nuances behind the term, What Does Median House Price Mean?, in our detailed article.
The step-by-step process of purchasing a house in Australia
Purchasing a home in Australia can be a complex process, but it can also be an exciting and rewarding experience. The amount of money you can mortgage and the kind of property you wish to buy will rely on your employment security, the family you have (if any), and your way of life.
Here is a general overview of the steps involved in buying a house in Australia:
Determine your budget
It’s important to know your budget constraints before you begin your property search. It will enable you to focus on fewer possibilities and avoid getting in over your head with mortgage repayments.
You might be curious as to how much loan approval you can receive from the financial institution. Having this in mind is good. But an adequate answer to that is determined by many factors.
Mortgages are very huge financial responsibilities. So, you need to consult your account manager to help you determine what’s affordable for you. It will be beneficial to you while you look for a property to buy.
Check your debt status
Request for your credit report file, and ensure you settle off your debts. The timing to buy an investment property or home may not be ideal for you if you possess poor credit. If you have multiple loans and/or credit cards to pay off, try to consolidate them.
You might get a bigger loan amount if you lower the threshold on your credit cards. To modify your payment terms schedule, get in touch with your provider if you are having trouble making credit payments.
Purchase price
It is important to seek independent advice from an accountant, lender, or financial advisor to clearly understand the total costs of buying a house. Below are some costs you may incur:
Stamp duty: The value tied to the stamp duty fees you pay will depend on the state you reside in and the property prices. A stamp duty checker/calculator can help you get a definite quote.
Deposit: You will need about 10 to 20% of the deposit to obtain home loans. But if you want to escape lenders’ mortgage insurance, you will need approximately a 20% deposit. Although there are home loans with low down payments, they come with significantly more mortgage insurance and possibly tight conditions.
Legal and conveyancing fees: You will need enough money to cover some legal fees and other checks. This may cost you about $2,000 to $3,000.
Building and pest inspection: By conducting a pest and building inspection, you may ensure that your investment property or home is in good condition. You shouldn’t ignore this because doing so could end up costing you a lot more moving forward.
The typical cost of a check to ensure that a property is free of pests and in good structural condition is $700–$1000.
Money and insurance fees: If you plan to borrow more than 75% of the property’s value, your lender will need you to pay for mortgage insurance in case you default on your loan. Fees for applications, closings, and appraisals may also apply.
As a home buyer, a home loan can cost between $400 and $800. This value is affected by the lender, while an appraisal can cost between $500 and $700 if your bank does not waive the price. So you need to compare home loans to get the best value.
As you consider these fees, also, note that home and contents insurance, land tax, and council rates . You may need to open an offset account and make a cash deposit to help you in times of emergency.
Get pre-approval for a Mortgage
To know your pricing range, it is ideal to get pre-approval before starting your house hunting. This will give you a better idea of what you can afford, and it will also make you a more attractive buyer to sellers.
Search for properties
There are many ways to find properties in Australia, including online real estate websites, local newspapers, and through a real estate agent.
It’s a good idea to start looking at properties as early as possible, as the property market in Australia can be competitive.
And before you head out house hunting, be prepared with our list of what to look out for when buying a house.
Research interest rates and mortgages
Be cautious to ensure you peruse and understand every paperwork and condition of any agreement. This is especially true if your deposit is ready but still want to go house hunting. You should look at the:
- How the interest is calculated
- Loan terms
- If your funds are re-drawable
- Interest rates
Make an offer
Making an offer to the seller is the next step after finding the home you want to buy. If you have a real estate agent, they can assist you and even negotiate on your behalf.
Exchange contracts
Exchange of contracts will take place after the seller accepts your offer. Your agreement to purchase the property and the seller’s agreement to sell it to you are both legally binding upon completion of this process.
Obtain financing
If you haven’t already done so, now is the time to finalize your mortgage and obtain the financing you need to complete the purchase.
Finalise the purchase
Once you have financing in place and all the necessary documents including the contract of sale have been signed, you’ll be ready to complete the purchase and take ownership of your new home.
Dig deeper: Are you a married couple buying a house under one name? Arm yourself with Soho’s guide so you are up to date with the legalities involved
FAQs on ‘How to Buy a House in Australia’
How Much Income Do You Need to Buy a House in Australia?
To buy a two-bedroom house in Sydney, you’d need a gross annual income of $192,400. For a three-bedroom home, you’d need to earn $217,800.
A four-bedroom home would require a gross annual income of $281,100.
What Are the Requirements to Buy a House in Australia?
To purchase a house in Australia, follow these steps:
- Decide to buy a home.
- Organise your finances.
- Determine how much you can borrow.
- Save for a deposit and explore available grants.
- Choose a mortgage that suits your needs.
- Obtain pre-approval for your loan.
- Start searching for a property.
- Conduct building and pest inspections.
How Much Deposit Do I Need to Buy a House in Australia?
The minimum deposit required is usually 10% of the property value. However, a 20% deposit is ideal to avoid Lenders’ Mortgage Insurance (LMI).
Don’t forget to account for other upfront costs, such as legal fees, stamp duty, moving expenses, and insurance.
Can I Buy a House with a $10,000 Deposit in Australia?
It depends on the property price. If you’re looking at a home valued at $100,000, a $10,000 deposit would be sufficient. For more expensive properties, you may need a larger deposit unless you have a guarantor.
How Much Do I Need to Earn to Borrow $500,000?
To afford a $500,000 loan over 30 years at an interest rate of 5.89%, you’d need to earn around $127,371 per year. This would cover the monthly repayments of $2,972.
How Much Income Do You Need to Buy a $650,000 House in Australia?
For a $650,000 home loan with a 30-year term at 6.19% interest, your monthly repayment would be $3,976.83. To comfortably afford this, you’d need a monthly household income (after tax) of at least $13,256.
How Do I Buy a House in Australia for the First Time?
- Save for a House Deposit
Start by setting aside funds for your deposit, aiming for at least 10-20% of the property’s value. - Work Out How Much You Can Borrow
Assess your financial situation to determine how much you can borrow, based on your income and expenses. - Find the Best Home Loan Rate
Compare home loan options from various lenders to secure the most competitive interest rate. - Search for a Property
Begin your property search based on your budget and location preferences. - Negotiate the Purchase
Once you find a suitable property, negotiate the terms of the sale, including price and conditions. - Settle on Your New Home
Finalise the transaction, ensuring all legal and financial steps are completed for settlement.
Is It Difficult to Buy a House in Australia?
While homeownership in Australia can require some flexibility and compromises, it is still achievable. With proper planning, savings, and smart decision-making, owning a home in Australia is possible.
Looking for a New Home?
Congratulations on taking the first step toward owning your dream home in Australia!
If you’re on the lookout for your next home, Soho can help you find it. Set up your profile on Soho to find properties for sale and properties for rent in your favourite suburbs.
But don’t just stop there, download our app to get access to more features. Just remember to shortlist or swipe left on our listings so we can send you others that better match what you’re looking for.
Suggested reading: Ready to buy property? Don’t miss out on our guide for what to look for when buying a house.
