Going for a home loan at the bank tomorrow for our first house. We both have great jobs and a lot more than the 20% deposit in the area we are wanting to buy so im confident we will get it. We both live with my parents and have never rented anywhere else. We have to leave because the house we live in is going to be sold.
Can someone run down what are the steps after tomorrow in basic words, because we are very clueless on the whole process. It takes a while for approval, then do we do nothing in the meantime? If we want a house.. who organises the house inspector? Does the bank and realtor organise everything?
How do you buy....a...house?
ego22 on 03/06/2021 - 18:53
Last edited 03/06/2021 - 18:54
Last edited 03/06/2021 - 18:54
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https://moneysmart.gov.au/buying-a-house
You organise everything. If you don't want to, you could pay a buyers agent
Also read this - https://www.ozbargain.com.au/node/610544 and be extra careful with how you get bank details and transfer money
You speak with the bank and arrange your preapproval. Ensure its a proper preapproval with a credit check and everything otherwise things might get delayed later.
Start browsing real estate dot com and shortlist houses you like. Look at the location, zoning, catchment, floorplan, amenities etc and then go to the open homes listed online or call the agents to arrange for one.
Educate yourself that it is a sellers market to avoid disapointment. It is a really good market for sellers right now so be prepared to compete with other buyers and make reasonable offers. Be respectful of the properties you inspect as it's someone's home. Lowballing will not work in this market. Make offer in writing on contact and offer decent deposit. And please find yourself a solicitor BEFORE you sign a contract.
Don't be afraid of auctions. They are a great transparent way to buy a house.
I recently purchased a place and all I can say is its not a quick process.
My partner and I were actively searching and offering for about a year before we got a property.
It tooks us a while to figure out what we both wanted and where.
Watch some auction videos online to learn the process and follow as many properties as you can in the area. You start to get a feeling what a property is lilely to sell for vs the price guide on the listing. At the moment its pretty common to add at least 10%.
See a mortgage broker, they’ll guide you through the process
On the lending aspect alone… Recommend a broker, particular in today's conditions with a backlog of loan approvals. Yes the broker earns money by getting you a loan, but that incentivises them to, guess what, get you a loan. They will chase everything up on the lenders side and will walk you through the process and be very clear about what information is needed and when. In addition to the loan, they can coordinate conveyancing for you and let you know when you need to have money in the conveyancer's trust.
And better yet, it doesn't cost you a cent (sort of).
Although, it can be a little more expensive in the lender and rates that you get because they generally tend to stick to the larger lenders and won't canvas the niche/bespoke loans of some smaller lenders, but for your first mortgage, you might not want to go with a niche product. They will do all the leg work, go to multiple lenders and come back to you with a variety of loans to choose from. We have used a broker on the last 2 of our 3 mortgages and will continue to on future transactions.
Also try to find a broker via word of mouth, from someone who has been pleased with their experience. There are a lot of brainless dills out there.
At some point you will need to engage a conveyancer. Some people will say you can "share" the vendor's conveyancer. This is not a good idea. You need someone who is acting 100% in your interest to see you through this complicated process. Think about how much you are able to spend on a house… hundreds of thousands at least… it's worth spending ~$1000 to make sure it all goes to plan. (Same goes for inspector as well: worth the money and get your own independent inspection)
Since you will need a conveyancer at some point, why not find one now? Then you have someone on your "team" who you can ask specific questions. At some point you will be facing a contract of sale and there will be time pressure to put pen to paper… best to already have a relationship with a conveyancer who you can send the contract to read through and flag any issues. Best read through the gov and state gov websites to get a basic idea before talking to the conveyancer though.
Speak with a mortgage broker and have them arrange a pre-approval.
That's all you can do that's tangible at this stage in the absence of finding a property you wish to purchase, other than seeking general advice on the process.
At that point, it's back to the mortgage broker, solicitors, property inspectors, etc.
Hey OP, I bought a house about 2 months ago and here's my process
- Go to a broker and see how much you can borrow
- Useful to find a conveyancer as well, don't go ultra cheap - they screw you with addons. Most normal ones cost $1000
- Once you have a max amount you can borrow, start looking at houses you fancy
- Once you have found "the one", ask the agent for a contract of sale (in person or via email before the open home)
- Fill in the contract and how much you're willing to pay(may need to google terminology, make sure you put building inspection as a condition)
- If the owner likes your offer they will accept it and sign the contract - Agent will contact you
- Forward signed contract to Broker and Conveyancer
- Organize a building inspection - just google local inspectors and give them a call. Mine cost around $300, but it's for piece of mind.
- Conveyancer will do all the pre-req checks and title searches etc
- Broker will contact bank and secure finance
- Once finance is secured and inspection is done (and no faults, or less than your tolerance level), the contract will be unconditional
- Conveyancer then arranges settlement date with other parties solicitor (on your contact, you write how many days for settlement - 30 days is standard I hear)
- On settlement date your conveyancer will contact you and you go and pick up the keys.
- House and debt is yours congrats!
Wow you got a good deal on your conveyancing and building inspection fees. Here in Perth, any decent conveyancer would cost $1500+ and building inspections $500+.
Your broker will tell you this, but on top of the house price are costs such as stamp duty and fees.
For example if you want a $500,000 house (bit hard in some cities!), here is a breakdown of costs
$500,000 potential purchase price
$25,000 + est costs @ 5% which cover stamp duty, Solicitor and Lender
$525,000 = funds required to purchase
$100,000 - 20% deposit saved
$425,000 = loan required @ 85% Loan Value Ration + LMIIf you get a loan with less than 80% LVR, you won't pay Lenders Mortgage Insurance. Here's a useful LMI calculator
My simplified run down:
Step 1 - Get pre-approval from a bank, do give you an indication of the 'maximum' they are willing to lend you.
Step 2 - Look for a house (well) within that maximum price the bank gave you.
Step 3 - Negotiate/Sign Contract on the house
Step 4 - Get unconditional approval from a bank/lender (does not have to be the same one)
Step 5 - Settle in your new home.If this is your first house you should check out the FHSS scheme and take advantage of it before this financial year end.
You should go and find a good solicitor/conveyancer after step 1 in my opinion.
They will be the only external party that are there really there to help you.Say goodbye to all your weekends and have
argumentsdiscussions with the missus during step 2.
I recommend chatting with your missus beforehand on what are some "must haves" and what are deal breakers for a house.
Most likely you will not find something that's 'perfect' for both of you, so set your expectations early and don't get emotionally attached.Make sure you actually read the contracts (every word) and book in time with your solicitor to go through anything you are not sure of in step 3.
You could go and see a mortgage broker for Step 4, but imo if your circumstances are straight forward you wont need one and can do the leg work yourself finding a good loan.
Remember the banks, real estate agents, mortgage brokers are not your friends, always do your own due diligence.
Best of luck with the whole process, I hope you do find your 'perfect' home.
Talk to your parents? They are more likely to warn you about the issues than your paid help.
Don't forgot to include stamp duty (if it applies to your price range, despite you being a first home buyer) into the cost of your purchase to ensure you have enough money to cover the entire purchase!
Bank approvals are up to 10 weeks behind at moment with approvals…. trust me I know :( :( :(
They are being flooded with applications etc.
If your in a rush, look around for lenders.
also look at
https://moneysmart.gov.au/buying-a-house or one of the other 50,000 hits when you search for process in buying a house australia
Use a Buyers Agent, Julie is well known ex-realestate agent and often appears in the Age, she does everything for you goes to inspections sends you options, talks to the realestate, negotiates etc, I have used her previously and she's very good
https://www.propertyhomebase.com.au/blog
https://www.propertyhomebase.com.au/negotiation-or-bid-only.…
Home Buyers & Investors - Victoria $8,800 *
Initial Engagement Fee of $2,200 * (non refundable)
Balance Due 5 Clear Business Days after the purchase is UnconditionalStrategic Property Investment Service – National $11,000 *
Initial Engagement Fee of $3,300 * (non refundable)
Staggered payments until Settlement.First Home Buyers purchasing BELOW $600,000 – $3,850 *
Initial Engagement Fee of $1,650 * (non refundable)
Balance Due 5 Clear Business Days after the purchase is UnconditionalFirst Home Buyers purchasing ABOVE $600,000 – $5,500 *
Initial Engagement Fee of $1,650 * (non refundable)
Balance Due 5 Clear Business Days after the purchase is UnconditionalNegotiation/Bid Only – $1,650 *
This is a once off, non-refundable, upfront Fee. If you are NOT successful in the Purchase of the home/property, this Fee can then be used as your Initial Engagement Fee should you choose to engage the services of Buyers Home Base further.For starters:
https://www.yourmortgage.com.au/home-loan-guide/11-steps-in-…But as others have mentioned above the whole process takes a while to complete. But before you start trying to place offers or go to auctions make sure you have your loan pre-approved first. There is a lot of good information above you can go through and a lot I would just be repeating.
The only things I would add are the following:
* Your post reads like you are not married to your partner and essentially entering into an agreement to pay the mortgage as joint ownership or tenants in common. Have this discussion early and get a binding financial agreement made up to cover each of you in the event the relationship breaks down and you have to sell the property.Factor in the additional costs of buying a house, not just the fees for the transaction to take place. Furniture, appliances, utensils, bedding etc
Be prepared to live very lean (depending on your repayments) for the first 6 months at least while your financials settle into a rhythm. Living in a rental means you miss out on all the additional bills like water and council rates and can be a surprise if you don't factor that into your finances.
Consider living in the property for the required time to skip CGT and rent it out for a year to take a chunk out of the mortage if you don't mind living with either sides parents. It will pay off a lot in the long run and could protect you should interest rates rise in the coming years.
Set a budget and stick to it!
It is extremely difficult to not get carried along with the current market boom but you need to put a line in the sand as to what you can afford and stick to it. What would happen if one of you is unable to work or decide to have kids?Insurance, insurance, insurance. Get it! And get it outside of your super.
- Income insurance in case you are struck down and unable to work
- Life insurance in case the worst should happen
- Trauma insurance is a luxury but good to have if an unexpected life event were to happen
And then for the house - Home and contents insurance for if the place burns down, floods or another event happens
This thread here has been highly helpful:
https://www.reddit.com/r/AusFinance/comments/i6askd/a_comple…Does the bank and realtor organise everything?
The bank does almost nothing.
The REA is there to maximise his commission. Anything he offers to do for you will be to his/her own benefit. The REA is not there for you.
If you are really clueless it might be worthwhile engaging a buyers agent to act on your behalf.
Sorry to hijack this thread, I have a quick question and thought it may be an overkill to start a new thread.
Is credit history essential for mortgage?
My partner and I moved here 18 months, we are on decent salaries, have good credit score back home (UK & Singapore) but we don't have much of a credit history in Australia. We pay for all utilities with the exception of internet through our landlord, the credit cards I have are from the UK. I have ZipPay and AfterPay accounts, always re-paid on time & in full. My partner pretty much only uses debit cards.
Is the lack of credit history going to negatively impact our mortgage application in anyway?
It will likely be another 12 months before we buy, so I am just planning ahead to see if there is anything we should do between now and then to ensure a speedy mortgage approval.Hey there,
A fellow clueless person here (they should teach this at school) who purchased first property. I watched countless hours of YouTube videos (make sure it is specific to AUS or better yet your state) and talked to as many people I could in real life to gain a better understanding and give me confidence in the process.
Below is just what I did, feel free to correct me if I am wrong in any parts. I have been casually looking for 2 years and seriously looking for about 4 months until I found my property.
Make yourself the best candidate for a loan.
It sounds like you and your partner already have stable jobs and a min 20% deposit. Get rid of things like other debts (car, HECS etc), cancel credit cards and streamline all your outgoings. I also have been tracking expenses for the past 5 years so I know where every dollar comes and goes. This step isn't necessary for everyone but it definitely made my experience with my broker a lot easier!Start casually looking online and in person.
Decide which locations you are after and make a priority list. This may be location, public transport, shops, school catchments, freeways etc. From here you will gain a rough estimate on unit/townhouse/house/apartment prices and establish yourself a price range of what you'd like to spend. Also look at sold properties within these areas online too. I had a spreadsheet to track when things were advertised, what they were quoted for and how much they sold. For VIC, the prices of properties are generally $100,000 above the quoted range…. don't get me startedGo to a broker
No, you don't need to pay for one. I found mine through word of mouth recommendations, as I would always ask other people about how they bought their homes as mentioned in my first paragraph. You need to bring payslips and ID, as well as what debts and monthly spending you have. They will recommend 3 banks/packages, compare online and also weigh up pros and cons of fixed and variable loans. Do not be afraid to ask "dumb" questions, it is their job to explain!Start seriously looking online and attending inspections and auctions.
I was only looking in a few suburbs so within those 4 months, I basically knew every REA in the area. I made sure to tell them exactly what I'm after (my priorities and specs) so they could let me know if anything was coming on the market. Your Saturday's should now be filled with attending every inspection and auction of anything you're remotely interested in. Watching bidders at auctions to learn techniques and the flow of the dayFind a property you are interested in + conveyancer
Once you have found a property, ask REA to send you contract of sale via email and let them know you are seriously interested and keep you up to date (if any offers come in before auction). You can arrange pest and building inspections at this stage (out of pocket expense). Send this contract to your conveyancer (again, I found mine through word of mouth and I read reviews) and they will highlight if there are any issuesAttend auction and bid/offer on property
If you are confident giving a fair (high) offer, go for it. Contact your REA and tell them you'd like to put it in writing. I tried to do this but there was a lot of interest so the vendors preferred to go to auction. Establish a budget with your partner. I was NOT willing to go even $1 above my budget, it is a budget for a reason. Be realistic and understand its a sellers markets and take into account similar properties sold in same area.???
Transfer your deposit to the REA trust account and contact your convancer and broker you have purchased a property
Can't help you any further than this as I'm only up to this step lol (currently in settlement period)
Best of luck with everything! Spreadsheets are you best friend, utilize them to gain data. Write down pros and cons of properties you love. Write down a priorities list that's agreed upon by you and your partner. Be realistic with prices, it's not what you want to pay, it's what someone else would pay… Good luck
Q:How do you buy….a…house?
A: In your case, 100% go through a GOOD mortgage broker, they will guide you every step of the way and recommend a good conveyancer. Finding one can be a bit hard, but once you do, your on easy street. You dont pay them, as the bank pays them commission, so it doesnt cost you anything extra upfront either.
They essentially do all the doing for you, you yourself never have to talk to the bank. Mortgage brokers literally do this for a living so they will hold you hand and guide you through every step, im very thankful i have a good one, otherwise it would have been a much longer, confusing process for me!
Have you identified a property you wish to purchase or not yet? If no then you're not getting anything tomorrow from bank beyond a tentative pre-approval for how much you could possibly be loaned.
You need to find a property you want, go for initial inspection and then understand how it's offered for sale. A normal sale price (i.e. property guide price $1m and you offer $950k) is becoming less common here as it's a sellers market with huge demand so everyone seems to be going auction route to drive prices up.
Example: https://www.youtube.com/watch?v=DcI2WtWiLNs
Auctions are risky as not only can people with bigger pockets than you win away but you have to pay 10% straight away and sort out remainder for completion within 84 days (on average). You have to have completed all your checks and satisfied yourself it's the one for you before auction day else forfeit the deposit if change your mind.
Either cases, things like inspections, surveys, checking for planning permissions if applicable etc are all on you to organise and do. You need to do plenty more research on this before jumping in and clearly not ready to buy yet. There's lots of online resources.