Buying a home
Home sweet home
Buying a home is a major decision that takes planning, research
and careful budgeting. Here are some tips to help you get
Are you ready to buy a
You are ready to become a homeowner if you have the following
things in place:
A substantial deposit
The bigger deposit the better when you're saving for a
home. A deposit of 20% of the purchase price plus enough
to cover costs is ideal.
The bigger your deposit, the lower your loan to value ratio (LVR). This is the
amount of the loan divided by the purchase price (or appraised
value) of the property. If your LVR is higher than 80%, you
will need to pay lender's mortgage insurance, and the
lender could charge you a higher interest rate. Avoid these extra
costs by saving a bigger deposit to lower your LVR.
You should also think about how you will pay for other up-front
costs like stamp
duty and legal fees.
A regular savings habit
A history of regular savings in your bank account and a solid
track record of employment will make it easier for you to get
Pre-approval for a loan
Compare a few different loans before you decide. Ask your lender
for a key facts sheet on each home loan so
you can compare more easily. Once you choose the
loan and have been pre-approved you'll know what the
repayments will be and how much you can afford to spend on a
Work out your how much your repayments will be.
Some additional savings
Your savings will act as a buffer if interest rates rise and
your repayments increase. Alternatively choose a loan that
allows extra repayments so you can build a buffer early on and
redraw it if you need it.
How to get into the
Not everyone can afford to live in their ideal location so what
can you do to get into the property market?
Widen your property search
If you're trying to get a foot in the market consider moving out
of your comfort zone into an area you may not have considered
before. Areas further out from cities or towns can be good value
for money and offer a great first step into the market.
Consider a smaller property
If you really want to live in a particular area you may have to
start small and work your way up. Consider an apartment or a
smaller house that you can add to over time.
Compromise on finishes
Properties that are dated or in need of renovation can be a
cheaper option for home buyers. Look for a home that is
structurally sound and then clean it to your standard. Add a lick
of paint here and there to improve the look and renovate as your
Consider an investment property rather than living in the
Investment properties outside capital cities or in smaller towns
or rural areas can have decent rental yields, making up for much lower capital gains.
The benefit of a positively geared
property is that a tenant repays your loan while you build
equity. This allows you to sell the property later and use the
proceeds as a deposit on a property closer to where you want to
live. Find out more about property investment.
Get an interest-only loan
You might consider an interest-only loan if you're trying to get
into the property market but you need to think carefully about
whether it will be the best loan for you in the long run. Read
about the risks and benefits of interest-only mortgages.
Land banking is a real estate investment scheme that involves
buying large blocks of undeveloped land with a view to selling the
land at a profit when it has been approved for development. Land
banking may be appealing to investors who are trying to get into
the property market but there are many risks with this type of
investment. Find out more about land banking.
Case study: Jane's dream comes true
'My partner and I had been renting
forever and could see house prices getting higher and higher - plus
we weren't getting any younger. We decided to bite the bullet and
for 4 years we saved every cent we could until we had a big enough
deposit to get away with the smallest possible mortgage.
'We found a rundown house in a great street and it has become
our labour of love to make it our dream home. Our plan is to put
extra money into our mortgage so we can pay it off in 15
What type of property can you
A good way to find out what type of property you can afford is
to create a household budget. Then you'll be able to see what you
can afford on home loan repayments.
Work out how much you can afford to repay by keeping a
Remember that on top of the repayments, when you buy a home you
will also have ongoing costs like land and water rates, house and
contents insurance, and repairs to put in your budget.
Use our mortgage calculators to crunch the
numbers on your repayments for different types of loans.
Stamp duty calculators
One of the bigger upfront costs you may have to pay is stamp
duty or transfer duty on your property. Find out how much you will
need to pay using calculators on the websites below. If you are a
first-home buyer, check what stamp duty concessions you are
entitled to in your state.
ACT - Revenue Office:
NSW - Office of State
Revenue: Calculator - for land and property transfers
Department of Treasury and Finance: Stamp duty calculators
QLD - Office of
State Revenue: Transfer duty calculator
SA - RevenueSA
calculator: Stamp duty on conveyances
Department of Treasury and Finance: Property transfer duty
VIC - State Revenue
Office: Our calculators
Western Australia - Department of Treasury and Finance:
Finding the right
There's no point looking for a waterfront mansion if you can
only afford a boatshed. Once you've set your price range, identify
the suburbs that have properties in that range - it will save you a
lot of legwork. Go to the Australian
Property Monitors: Home Price Guide to see property prices in
Take your time and consider things like proximity to schools,
transport and amenities, and the condition of the property. Does it
need major repairs?
Before you buy, arrange for building and pest inspections, and
have the contract checked by a conveyancer or solicitor before you
sign. Make sure the person inspecting your future home is qualified
to do so, such as a licensed builder, architect or surveyor.
In some states you can also have inspections during the
'cooling-off period', or the 5 days after you sign the contract, as
long as you don't buy at auction - where there is no cooling-off
period. If you withdraw during the period you will lose part of
Read our tips if you plan to buy a property as an investment, rather
than a home to live in.
Steps to buying a property
The process for buying a property is slightly different in each
state and territory. For detailed information visit the fair
trading office for your state.
When you are buying a home try to keep to your
budget, put some money aside for emergencies, and take your time to
find a place that feels like home.
Last updated: 18 Apr 2017