Buying A House: Step By Step Guide

There’s nothing that quite matches the excitement of buying a property, especially when it’s your first home. To make the journey from home hunter to homeowner a little easier, we’ve created a step-by-step guide covering all the major property-buying pit stops.

Step 1: Save for a deposit

You can take this first step when buying a house or apartment, which is no more than a thought in the back of your mind. Having a history of consistent saving will give you a lot of credibility with your bank. It shows you have the discipline to save for a deposit and the capacity to repay a mortgage.

A regular savings plan will also be instrumental in helping you work out how much you can afford to borrow when you’re ready to buy. If you can comfortably set aside a predetermined amount every payday for a year or more, chances are you’ll be able to meet loan repayments at the same level.

If you’re wondering how much you’ll need to save for a deposit, this will vary depending on the price point of your target properties and the loan-to-value ratio required by your bank.

If you begin saving as soon as possible, you’ll have the best head start.

Step 2: Find out if you qualify for any grants

The government offers various grants, schemes, discounts, and incentives to help first-time home buyers enter the property market.

You’ll need to research your government area to see what you’re eligible for. Still, in most states, you can expect a financial boost if you’re planning to live in the property you buy for at least six continuous months and/or you’re buying/building a brand new home up to certain price points. Some lenders will even count the first home buyers’ grant towards your deposit.

Step 3: Create a list of must-haves and a list of nice-to-haves

Writing a wishlist is a popular step on the journey to becoming a homeowner, but it’s a good idea to divide this list into two.

The first list should include your must-haves. These are the deal-breakers you believe you can’t compromise on.

For example, you may want to live within a particular school zone, be no more than a half-hour commute from the office or from elderly parents, or have a double garage or workshop space to support an important hobby. Perhaps you need a fenced yard for a pet or single-level living due to mobility issues.

The second list will detail all the features that would be nice but not essential, such as air conditioning, a gas connection in the kitchen, or a park view. You may like four bedrooms but would settle for three, or you would prefer a dedicated home office but would settle for a study nook.

You can use these lists to narrow down your options when you’re ready to buy and share them with agents you meet who can help you find a home.

Step 4: Get a loan pre-approval

Your mortgage broker or bank can help you secure a home loan pre-approval. Pre-approval means a lender has agreed, in principle, to lend you a certain amount of money towards the purchase of your home. It means you’re one step closer to being what agents call a qualified buyer - a buyer they should take more seriously because you’re more prepared to buy.

It’s also a good way to set your budget because the pre-approval will lock in how much you can afford. The lender will look at your assets and liabilities, income and expenses and assess whether you would be eligible for a home loan. If you get pre-approval, it generally lasts for three to six months, allowing you to inspect the property within your price range with more confidence, knowing you will most likely be able to secure a loan.

Step 5: Research your target areas

While information provided by friends, family and the media can help you become familiar with a neighbourhood, it’s important to conduct your own research.

Once you have a shortlist of suburbs, do your homework on property prices—can you afford to buy here? Vacancy rates—they can be a positive indicator if a suburb is in high demand. Crime rates—are there any recurrent problems? Plus, amenities.

One of the best ways to see what a suburb offers is to go for a leisurely walk through the streets, noting the housing types, whether homeowners are house-proud, and where public transport, shops, parks and schools are located.

Stop and talk to the locals - they are better placed than anyone else to tell you what living in their suburb is like. And be sure to befriend the local agents. Not only will they be able to help you with your early research, but they’ll also be instrumental in helping you find a home that meets your needs.

Step 6: Get legal advice

When your house hunting gets to a serious end, you’ll need legal help to make sense of sales contracts. A sales contract includes the terms and conditions of the sale and important information about the land. While there’s a standard contract of sale used for most residential property transactions, each seller can amend the contract with their own special conditions and clauses. For example, the vendor might want a long settlement, or they may plan to remove certain fixtures from the home.

A solicitor or conveyancer will be able to advise you on the contract. They’ll be able to explain any complicated inclusions and can also request changes to the contract if required.

Step 7: Do the appropriate inspections

Some vendors will make a recent pest and building inspection available to potential buyers, but you’ll often have to pay for one yourself. An inspection is important to confirm that the property you’re keen to buy is structurally sound, free of pests, and doesn’t need any urgent repairs.

If the report uncovers an issue and you still want to buy the property, you may be able to use the findings as leverage to negotiate a better purchase price.

If you’re buying an apartment, you can inspect the strata records yourself or order a strata report from a company that specialises in inspecting these records. You want to find out if the building has any defects, if it’s well-maintained, if there have been disputes between owners if there are adequate finances to cover the building’s running and maintenance costs, if the building is adequately insured, and if there are any special levies due.

Step 8: Make an offer

The final step in buying a property is to put forward your best offer directly to the agent or by bidding on auction day. If you’ve done all your due diligence in the lead-up, you’ll have a good idea of how much the property is worth and what level of competition you are up against.

Keep in mind that while a vendor may accept your offer, it is not legally binding until you have both signed and exchanged contracts.