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Your Must-Have: Checklist for Buying Your First Home in Australia

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Planning to buy your first home in Australia? While this is undoubtedly an exciting journey, it can also be complex and challenging at the same time. That’s why we have prepared this comprehensive first home buyers checklist for you. This guide is designed to simplify the myriad of tasks and decisions you’ll face, helping make your path to homeownership as smooth and informed as possible.

Research and Compare the Market

Research the housing market thoroughly by exploring different neighbourhoods and suburbs, considering factors like demographics, transportation, schools, local amenities, and crime rates. This will help you understand market trends, such as price fluctuations and demand, ensuring your decision aligns with your lifestyle and financial capacity. Also, compare various properties within your budget by examining listings, visiting sites, and assessing aspects like size, layout, and growth potential. This comparison clarifies what your budget allows in your preferred areas. Also, consider consulting real estate agents, attending inspections, or hiring a buyer’s advocate. By having a comprehensive research and comparison process, you can find a property that meets your current needs and represents a wise, long-term investment.

Take a Look at Your Finances

Assessing your finances is a critical step in the checklist for buying your first home in Australia, as it lays the groundwork for all your subsequent decisions. This step involves two main tasks: saving for a house deposit and determining your borrowing capacity. As a prospective homeowner, you need to prepare a deposit that is typically at least 5% of the home’s value. However, aiming for a deposit that is at least 20% of the purchase price is ideal because it helps avoid Lenders Mortgage Insurance (LMI), which is required when borrowing more than 80% of the property’s value. Next, the task of determining your borrowing capacity involves understanding how much you can realistically afford to borrow, considering your income, financial commitments, credit score, and the deposit you have saved. It’s crucial to factor in the current and potential future changes in mortgage interest rates to ensure affordability over the long term. You can also use tools like online home loan borrowing power calculators to get an estimate of the maximum amount a lender might be willing to lend you.

Check for Grants

Explore government assistance programs to help lighten the financial burden of buying your first home. One key program is the First Home Owners Grant (FHOG), which is available in many states and territories. This is a one-time payment to eligible first-time buyers, typically given at settlement directly to your lender. However, the amount and eligibility criteria vary by state, so research what’s available in your area. You can find out more about the FHOG and other grants through our blog post, What Grants Are Available for First Home Buyers in Australia. Knowing about these grants can significantly help you achieve homeownership in Australia.

Get Pre-Approved for Mortgage

This pre-approval process gives you a clear idea of how much you can borrow. To get pre-approved, you will need to choose a lender and provide them with various documents, including proof of income (such as payslips and tax returns), bank statements, proof of savings, and a list of your current assets and liabilities. This might also include 100 points of ID, such as a driver’s licence, passport, and Medicare card. The lender uses these documents to evaluate your financial health and creditworthiness. It’s important to note that, while getting pre-approved does not guarantee your home loan application will be successful, it does put you in a stronger position when making an offer on a property. Pre-approval typically lasts for 3–6 months, giving you a clear timeframe for your property search. It also signals to real estate agents and sellers that you are a serious buyer with confirmed financing, which can be advantageous in negotiations, especially in competitive markets. However, remember that the amount you are pre-approved for is the upper limit of what you can borrow, and you should consider your lifestyle and other financial commitments when deciding how much to borrow. This cautious approach ensures that you don’t overextend yourself financially and can comfortably manage the mortgage repayments in the long term.

Consider the Property’s Location

When buying a home in Australia, consider the potential property’s location carefully, as it greatly affects your lifestyle and the home’s investment value. Think about how close the house is to public transport, schools, and local amenities like parks, cafes, restaurants, and medical facilities. Also, take into account the suburb’s profile, including its demographics and crime rates, as well as its proximity to shopping centres and major highways. Be aware of any upcoming developments in the area, as they can influence future property values and your living experience. You should also personally visit the potential neighbourhood. This will allow you to experience the area firsthand, which online research or discussions with agents can’t fully convey. Being there in person gives you a real sense of the community’s atmosphere, noise levels, traffic, and overall upkeep. Visit at different times to see how activity and noise change, which can inform your decision. A personal visit can also reveal details about a property, like the true size of rooms or the quality of finishes, helping you better visualise living there and decide if it meets your needs and preferences.

Make an Offer

The next step is to make an offer to purchase your chosen home. This can be done in two primary ways: an unconditional offer or a conditional offer. An unconditional offer is a firm commitment to buy the property outright. This type of offer is typically made when you, the buyer, are confident about your financial situation and certain about the property. In contrast, a conditional offer becomes binding only if certain conditions are met, such as obtaining finance approval, satisfactory valuation, and positive outcomes from building and pest inspections. These conditions protect you by ensuring that you are not legally bound to complete the purchase if essential criteria are not met. The process of making an offer varies depending on whether the property is being sold via auction or private treaty. For auctions, bidding is competitive, and you, the buyer, must be prepared to pay a deposit immediately if you win the auction. There is no cooling-off period for auction purchases. For private treaty sales, you make an offer to the seller, usually through a real estate agent. If the offer is accepted, a contract of sale is prepared by the seller’s solicitor or conveyancer. You should thoroughly review this contract, often with the assistance of your own legal expert, to avoid any costly mistakes. In most states and territories, there is a short cooling-off period for private treaty sales, allowing the buyer to withdraw from the contract under certain conditions, usually with the return of most of the deposit. This step is crucial in the home buying process, as it legally binds the buyer and seller to the transaction under the agreed terms and conditions. Now, remember to negotiate wisely during the offer process. Be clear on your maximum price, adhere to your pre-determined budget, and be prepared to walk away if necessary to avoid overspending.

Get a Property Inspection

Getting a property inspection involves hiring licenced professionals to conduct detailed building and pest inspections. They’ll examine your chosen property’s structural integrity, including the building’s overall condition, roof state, water damage, wall stability, and safety issues like asbestos or structural cracks. They’ll also assess the need for future repairs, ensure electrical and plumbing systems are up to standard, and confirm property boundaries. Moreover, the inspectors will search for termite activity and other pests; this step is vital for avoiding future infestation damage. Remember to consider environmental risks as well, like flood or bushfire threats, as these can impact the property’s value and your living experience. These comprehensive inspections provide a full picture of the property’s condition, helping you make a better decision and potentially negotiate a lower price based on any issues found.

Get Ready to Close

When preparing to close on the property, you should carefully consider the closing costs, which are the final expenses of the real estate transaction beyond the sale price. These include conveyancing fees paid for a solicitor’s or conveyancer’s legal services in transferring the property. Conveyancers are crucial for managing legal paperwork, complying with regulations, and handling any property-specific issues like planning controls. Additionally, finalising all necessary documentation is essential. This means ensuring that legal and financial documents, such as the contract of sale and loan agreements, are accurately completed and signed. Thoroughly review and understand these documents, as they detail the property’s specifics, sale terms, and both parties’ obligations. Paying attention to these details will help you avoid future disputes or legal issues.

Move In

first home buyers checklist sydney
This step is the culmination of your property purchase journey, marking your transition from buyer to homeowner. At this stage, it’s important to arrange for the transfer of utilities and insurance into your name, effective from the settlement date. This ensures that services like electricity, water, gas, and internet are ready when you move in. In addition, transferring home and contents insurance helps protect your investment. Planning your move is another key task. This involves hiring a moving company, scheduling the move, packing, and possibly arranging storage. Start early to ensure a smooth transition. Begin by decluttering, packing non-essential items, and preparing a moving day plan. This preparation helps make your move to your new home stress-free and organised, allowing you to celebrate your homeownership with ease and excitement.

Conclusion

Purchasing your first home in Australia is a significant milestone that requires careful planning and consideration. By following this first home buyers checklist, you’ll be better prepared to navigate the property market and make informed decisions. We also highly recommend consulting with a mortgage broker who can provide you with professional assistance and sound advice. Remember: Having a smooth and enjoyable home-buying experience is a combination of finding the right home, managing your finances wisely, and understanding the complexities involved in property ownership.

FAQ

    1. What are the upfront costs of buying a home in Australia?
Upfront costs include Lenders Mortgage Insurance (if you borrow more than 80% of the property’s value), legal and conveyancing fees, stamp duty (varies by state), and building and pest inspections.
    1. What ongoing costs should I expect as a homeowner?
Ongoing costs include water and council rates, strata and body corporate fees (for certain types of properties), home and contents insurance, and regular maintenance and repairs.
    1. Is it better to buy a house or an apartment?
This choice depends on your location, budget, and reasons for buying. Apartments may be more feasible in major cities for first home buyers, while houses might be preferable in country towns or regional cities.
    1. Should I buy a property now or save for a larger deposit?
Consider current interest rates and market trends. If property prices are rising faster than your saving ability, it may be better to buy as soon as you can afford it, even with a smaller deposit.
    1. Can I buy a home on a low income?
Yes, it’s possible, but lenders will scrutinise your application more closely. Look into government assistance programs and tips for increasing your mortgage approval chances with a low income.
    1. Can I buy a house with a friend or family member?
Yes, you can co-purchase a property, but make sure to have a clear agreement on financial responsibilities and what happens if one party wishes to sell.