The process of buying property varies a lot around the world. And whether you’re from the UK, New Zealand, Afghanistan, China or anywhere in between, we can you understand the process.
In Australia, whether you’re buying a property in a private sale, ‘off the plan’ (purchasing a property that hasn’t been built yet) or at a public auction, here are 5 simple steps to finding your dream home here in Australia.
Note that, depending on your residency status, there are some regulations that will also have an effect on your purchase. Most importantly, most non-residents must get approval from the Foreign Investment Review Board (FIRB) to own property here.
These people don’t need to apply to the FIRB:
- Australian permanent visa holders
- New Zealand citizens
- Those buying with their Australian spouse, New Zealand spouse, or Australian permanent resident spouse. (Conditions apply which your broker will help you understand)
Most other non-residents need to apply to the FIRB, although some property purchases are also exempt. We can help, but we suggest that you talk to a property lawyer for more information.
1. Know your budget
Australia is known for having costly real estate, particularly in the major cities, so it is crucial that you understand how much cash you will need and what your ongoing costs will be.
The majority of Australians purchase real estate with the aid of a home loan. We have many government-approved banks and other lenders, all offering different loan types. It can get confusing.
A lender normally requires you to have between 10% and 20% of the property’s cost saved up to use as a deposit. There are some exceptions, but the more money you have, the more options you have when choosing a loan.
Stamp duty is an unexpected cost that many people from outside of Australia overlook. This is an extra amount that buyers pay to the State Government each time a property changes hands. It’s different in every state and territory, and can add tens of thousands of dollars to your up-front costs.
Look at online calculators offered by all major lenders and talk about your options with a mortgage broker.
2. Apply for a loan
Many people choose to seek assistance and guidance from a mortgage broker rather than search for their own loan with banks and other lenders.
While you do not need to use a broker, some advantages are:
- Brokers look for a loan that will meet your needs while taking into account your unique financial and family situation and the market for different loans.
- Loans come in many different forms, with features including fixed or variable interest, offset, redraw, and more. The interest rate is only one aspect of it. A broker can explain these different options and help you choose what’s best for you.
- Brokers provide free advice and services because they are paid by lenders through commission. This means you’ll never pay a broker. If you do get a loan, the bank or lender will usually charge you other fees, but a broker will let you know ahead of time.
Mortgage broking is highly regulated in Australia, and brokers are required by law to only recommend loans that are right for you.
3. Purchase a property
Once you’ve decided on a loan, your broker can assist you in obtaining pre-approval (where your lender has agreed to loan you a certain amount of money). This helps you know how much you can offer when trying to buy a house or apartment.
Banks are more willing to lend to you if you have greater savings and a stable job in Australia.
There are several real estate websites and app that let you search for available properties, looking in preferred neighbourhoods, or searching by price, the number of bedrooms and more. The two largest Australian real estate websites are Domain and Real Estate.
In Australia, private sales (when a property has a set price that you agree to pay) and auctions (where you compete directly with other buyers, bidding in public until someone wins) are the two most popular ways to purchase real estate.
Before placing a bid or making an offer on a piece of property, speak with your broker or your lender. Real estate contracts are legally binding, so you must make sure you have enough money. There are also various strategies you could use to avoid overpaying.
4. Own your new home
When the money exchanges hands between your lender and the seller (usually a few weeks or months after the contract is signed), ‘settlement’ is said to have taken place. This is moment when the property actually becomes yours.
Settlement can be complicated, involving several banks and other people. We always suggest you use a solicitor or a conveyancer to handle this step for you. They are also useful before you sign the contract, making sure everything is right and as you expect it.
Once that’s all done, it’s time to get home insurance, set up your electricity, gas, phone and water, and move in. Congratulations!
Speak with an expert
While finding a home that meets your needs and budget is the main goal of house hunting, there are lengthy documents to complete and confusing legal steps to understand. That is why so many people choose to use a mortgage broker.
At Mortgage Broker Group, our experts can take the confusion away and make sure that everything goes smoothly, all at no cost to you.