How to Buy a House 🏘 (Step-By-Step Case Study)

There’s more to it than you think

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Are you dreaming of buying a home in 2024 but feel like you’re lost in a confusing maze? However, with the right knowledge and tools, getting your own place has never been easier. Today, you’ll learn How to Buy a House in 2024. 

We’ll cover everything from the exact step-by-step process of buying a home, the different people you need to talk to and some massive pitfalls home buyers make every day. By the end of this article, you’ll have all the tips and tricks to make your dream of home ownership a reality.

The best part?

You won’t need a massive deposit to secure your dream home.

In fact, there are THREE different ways of buying a home with no deposit.

Let’s dive in

Table of Contents

1. Decide It's Time To Buy

Buying a house isn’t easy. It can be a long and expensive process—sometimes taking up to 12 months. On the other hand, owning a house is an incredibly rewarding experience.

It can help you build equity in a property, grow your wealth and give you security in owning your own place.

The first step in all this is just deciding if it’s time to buy, if it’s time to invest in property or if it’s better to keep renting.

Should I buy or should I rent? Each has its own benefits.

Realistically, there is no right or wrong answer for anyone; it is up to your personal preference… But the first step to buying a house is deciding you are ready to buy!

However, if you live somewhere where property prices are unaffordable, there is another strategy you can consider. This strategy is called Rentvesting and allows you to buy where you can afford whilst living where you like – giving you the best of both worlds.

Read More: Can’t Afford to Buy Where You Live? [We’ve Got the Answer!]

2. Talk To A Broker And See How Much You Can Borrow

A broker will help you determine how much you can borrow.

Sitting down with a broker is a good next step. Not only will a broker tell you how much you can borrow, but they’ll also factor in the extra costs of buying a home, like stamp duty, solicitor fees and other costs you need to consider when buying your home.

A mortgage broker will help you determine your home-buying capacity. For example, if you’re buying a $550,000 home in Queensland, there’s an additional $15,000 in costs, which include Stamp Duty, Transfer Duty, solicitor fees and other miscellaneous fees that you need to add on top. So, in total, you need $565,000 to buy the home. In this case, not only do you need a 5% deposit, which is $27,500, but you also need to cover the $15,000 costs we have just mentioned. So, the minimum savings you’d need if you’re buying a $550,000 home as a first home buyer in Queensland is $42,500.  

Talking with a broker can also make you aware of what other schemes you might be eligible for as a first home buyer. You may be able to get a grant if you’re buying a brand new property, or you may be able to take advantage of the home guarantee scheme and not pay lenders mortgage insurance. We will cover these in a later section.

This relatively quick conversation with a broker can guide you on your budget for your first home purchase. You get an understanding of the repayments and the ongoing costs to ensure they fit in with what you can comfortably afford.

3. Find A Home Loan That Works For You

In the old days, there was only one type of home loan, so you didn’t have any choice in what kind of loan you got.

Nowadays, there are literally hundreds of home loans available in Australia, all with different features and benefits.

Which home loan is right for you? There are hundreds to choose from.

At this point, you have already spoken with a  Mortgage Broker, so they will work on your behalf to arrange a home loan through a bank.

As we mentioned above, a mortgage broker will look at what you want to achieve and find a home loan that works for you. They will also help you 

 work out a price range and budget for buying a home and give you an idea of what you can spend.

When it comes to choosing the right home loan for you, it is best to use a mortgage broker. So, if you haven’t already spoken to a broker, you need to speak with one at this stage.

Read More: Home Loan Features Explained

How do I buy a home with no deposit?

As we mentioned above, there are currently THREE different ways to buy a home with no deposit.

  • Guarantor Home Loan. Buying a property with your parents as a guarantor lets you borrow up to 105% of the purchase price! This means you don’t need any savings as your parents provide a guarantee secured on their property.
  • Gifted Funds. If you have a family member or relative who is willing to give you the deposit, you can buy a home effectively with no deposit!
  • First Home Owners Grant (Great Start Grant in Queensland) – In Queensland, you can purchase a brand new property or build a new home and receive $15,000 from the government, which can be used towards your deposit plus stamp duty benefits.
Example of a typical guarantor home loan structure

4. Get A Pre-approval

A pre-approval is a preliminary loan approval from a bank letting you know what you qualify to borrow. It is also known as a conditional approval, indicative approval, approval in principle or home seeker, depending on your bank.

To get a pre-approval, you just need to give your credit history to your broker or lender, who will then verify your income and give you fairly clear guidelines on what you can afford to borrow.

In effect, it’s like the lender is telling you they will lend you X amount of money provided your income and personal circumstances don’t change. This allows you to make stronger offers on the property with shorter finance terms, meaning you can get a better deal and get into the home of your dreams sooner!

A pre approval can save the day but BEWARE! Not all pre approvals are the same.

BEWARE! Not all pre-approvals are reliable.

Not all banks are the same when it comes to assessing a pre-approval home loan. Some banks may just complete a credit check and not check any of your documents until you lodge a full mortgage application. This may lead to your home loan being declined after pre-approval. 

Read more: How reliable is your pre-approval?

5. Find The Right House

Having a pre-approved loan allows you to think ahead and plan your property search wisely. This is often the hardest part of the process—trying to narrow down the type of property you want, the suburbs you like and what you want from that property. 

Create a list of essential features that you definitely must have in your home. This will keep you focused on purchasing a home that is suitable for you and meets your requirements.

Property can be a largely emotional purchase, so you need to consider a few things before falling head over heels on a property:

  • What is your “why” for buying this property? Is it to live in, or will you rent it out in the short term? The main purpose of the property will determine the kind of property you buy.
  • Do you plan on staying in the property for a few years? Your first home is not likely to be your forever home; it is just your first step towards your future mansion!
  • Can you afford repairs and upkeep on the property? If it is an older Queenslander-style property, have you budgeted for ongoing repairs and maintenance? Will it need a new kitchen and bathroom in the short term? Will you be able to afford these costs?
  • If you bought the property, who would buy it from you in a few years? It’s good to start with the end in mind when buying a property. Always think about who you will sell it to in a few years. If it’s going to be a very narrow market like retirees, will this harm the property’s growth potential?
House Buying property checklist.

6. Research Your Potential Home

Regardless of what you intend to buy, carrying out market research is really important to identify the right price and reasonable quality of a product.

Because purchasing a home is a huge investment, you must conduct local market research to find out the current prices of the type of property you are looking for, as it will enable you to avoid paying above the market value.

You can use online tools to research the value of your home.

Here are some online methods you can take to research the value of a property:

In addition to checking the value of your home, it is important to get a flood report to make sure you are not buying a property in a flood zone. If you do decide to buy the property anyway, then at least you will be aware of the risk.

Read More: How to Research your suburb and surrounding areas?

The flood awareness map let’s you know what the history of flooding is at your property and is an important tool to use.

7. Complete Your Property Inspection Checklist

There is no substitute for physical inspection when it comes to purchasing a home.

It allows you to see other attributes that you would have otherwise ignored while searching for a property, such as its locality.

Using a property inspection checklist can help you make sure the property ticks all your boxes.

Whenever you plan to visit a property, plan a building and pest inspection before making a purchase, as it will disclose the problems beforehand that would otherwise be costly to fix.

Download now: Property Inspection Checklist

8. Make An Offer

Now, the exciting part.

Making an offer on a property is an easy process.

You do not need to sign a contract of sale to make an offer on a property. You can get your offer accepted by the agent (and the sellers) before taking time to fill out the contract of sale.

You do not need to sign a contract to make an offer on a property

We have personally used this template to purchase properties in the past. It’s worth keeping your offer short and to the point, including:

  • Purchasing Entity: I.e. your full name, including middle names.
  • Price:
  • Deposit
  • Finance and building and pest terms
  • Settlement Dates
  • Lawyer details

Read More: Making an offer on a house below the asking price

9. Find Your Conveyancer or Solicitor

A conveyancer or solicitor looks after your legal interest in the home-buying process. Specifically, they will look through the contract of sale and ensure that there are protections in place to look after you. 

Now, conveyancers are not going to be able to do much until you’ve identified and found the right property and you’ve got a contract you’re going to look to sign. However, it is worth being on the front foot and having them ready for that day when you need to make the call.

Our tip for a conveyancer is don’t go cheap.

When it comes to hiring a conveyancer, get the most qualified one.

It might sound like a great idea to save $200 on the conveyancer’s fees, but this can be extremely risky, especially since you are dealing with hundreds of thousands of dollars.

We had a situation with a home buyer named Tim a couple of years ago who went really cheap. He was using a friend of a friend’s mom, who was a part-time conveyancer, to help with his first home purchase. It was all going well until the settlement day when his friend’s mom was off sick. Being the only conveyancer there, the settlement couldn’t be completed.

When it comes to choosing a conveyancer, check out their Google reviews, and if one conveyancer seems more legitimate but another one comes as recommended by a friend, it’s worth going with the safer option. You could be risking your $600,000 home over a $200 fee.

Read more: What are the differences between a Lawyer and a Conveyancer?

10. Questions To Ask Before Signing The Contract of Sale

Ok, so you’ve made it this far, but…

Do you even know what the Contract of Sale is?

The contract of sale is a legal agreement that contains terms and conditions agreed upon by both the seller and buyer in a clear manner.

It is prepared by a lawyer or in Queensland by a real estate agent and typically includes the following:

  • Name and address of the seller
  • Plan number, reference number, and address of the property
  • Fittings and removable items, such as appliances, blinds, or any other easily removable items, included in the sale
  • Deposit amount and purchase price of the property
  • Details about the settlement
  • Information about the property as to whether it is vacant or on lease
  • Sometimes, it includes reports, such as building inspections, pest inspections, etc.

It is very important to look at the terms and conditions of the contract before signing it as it may involve special conditions that aren’t in favour of the buyer. This is where your solicitor or conveyancer will come in.

Before signing a contract of sale, there are 5 questions you need to ask.

Keeping that in mind, here are five questions you should ask before signing a contract of sale:

Question 1: Are You Getting What You Are Looking For?

Buying a property in a real estate market doesn’t always go as planned. There are a lot of things you have to consider, and at times, you have to come to a compromise. But when you get your contract of sale, take a look at the following things.

  • Look at the copy of the registered plan that is normally attached to the contract and check if the property description is the same as inspected. If something doesn’t seem right on the plan, hire an independent surveyor to inspect the property and prepare a plan.
  • An unregistered or registered easement is what you should be looking at next. If the house has any easements, there might be restrictions on how you can use that portion of the land.
  • As discussed earlier, it’s important to get a clear idea about the fixtures you will be getting along with the property. These are things like light fittings, carpeting, pool equipment, stoves, blinds, or curtains. Clearly ask what is included in the contract of sale because it is not right to assume that everything you saw during the inspection will be included in the sale.

Question 2: How Much Deposit Do You Have to Pay?

This is the second question you should be asking when going ahead with the purchase. Buying a house is a big decision, and you should be fully informed before taking any steps toward it.

The amount of deposit you are required to pay will be included in the contract. In Queensland, it is divided into two parts:

  • The first is a holding deposit (also called the initial deposit), and is usually a small amount of $500 to $2,000 (or up to 0.25%) to secure the property.
  • The holding deposit shows you are serious about wanting to buy the property and needs to be paid within 3 business days of signing the contract of sale and can range from $10,000 to 5% of the purchase price…
The Deposit in Queensland is split into two parts on the contract of sale. (1) the holding deposit and (2) the balance deposit. Both need to be paid for the contract to become unconditional.

Question 3: Does the Contract of Sale Involve Any Special Conditions?

As discussed, you should definitely ask about any special conditions included in the contract of sale because these are the things you should be reading over and over again until you get a clearer picture. An example of special conditions can be things like paying a penalty to delay the settlement or a transaction being subject to tenancy.

As a buyer, you too can include special conditions in the contract, such as a satisfactory report of pest or building inspection, or sale is subject to selling your own property.

Termites are surprisingly common in Brisbane homes. So you add a building and pest condition to give you time to get a report completed.

Question 4: How Long is the Settlement Period?

It is crucial to choose a reasonable settlement period, keeping in mind your particular situation. For example, if you are in the process of selling your house and want to move to a new home by a particular date, it’s important to negotiate a settlement date that is suitable for you.

Normally, the settlement date can be 30 days, 60 days, or 90 days. Some sellers might not want to go with the longer settlement period, while others may not want a shorter period. So consult with your real estate agent as to what the seller’s motivation is.

Typcially settlements in Queensland are 30 days from contract signing, but you can extend this to 45 or 60 days depending on your situation (and the sellers willingness to accept it!)

Question 5: Does the Purchase Involve Cooling Off Period?

The cooling-off period is mentioned in the contract of sale. You must be aware of what can happen if you plan to withdraw from the contract after signing it.

In Queensland, the cooling off period is 5 business days and gives you an opportunity to change your mind after signing the contract. But cooling off period does not apply when you buy a house at auction.

Also, find out about any financial penalties in case of withdrawing from the contract.

Buying a property comes with huge financial responsibility. Therefore, take your time, conduct due diligence, and ensure the terms and conditions are satisfactory. Speak to our team of experts today for more information.

Read More: Signed a Contract of Sale on a Home? [5 Simple Steps to Settlement]

11. Sign The Contract Of Sale

If the owner likes your offer, they will accept your contract, and you will both put your names on the dotted line. The agent will contact you and say congratulations, you’ve got your new home; now it’s time to do everything else. At this point, you’ll forward your contract to your broker or conveyer. 

Organise a build and pest inspection.

This is a good part of the process just for peace of mind. A building and pest inspector is a qualified Builder who’ll go and check out your new home, look in the roof, check for termites, white out damage, water damage, etc. and give you a bit of peace of mind that the place is in tip-top shape. 

If they find something wrong, you can talk to your solicitor about cancelling the contract and seeing what that involves or try to negotiate the price down if it’s things that aren’t too big.

Take out insurance

Once you have paid your deposit on a property, you have legal right over the property called a financial interest… Make sure you get your insurance sorted ASAP.

From the minute you sign your contract of sale, you should take out insurance. This is because, once you sign the contract of sale, the property is now your responsibility, even if you haven’t got the keys yet. Insurance will protect the property from fire or flood damage,

12. Sign Your Loan Contracts

Once you have taken all the steps mentioned above, the broker will forward a copy of the signed sale contract to a lending institution where arrangements are made for the property valuation.

If the result of the valuation is fine and other loan terms have also been met, the lender will grant full loan approval.

At this stage, the lender will grant full loan approval

This is where your broker and solicitor come into play as they transfer the property into your name and ensure the settlement occurs within a specified period.

After successful completion of the entire process, all you have to do is pack your belongings and wait for settlement (which typically takes 30 to 90 days).

13. Move Into Your New House

Woo, you made it! Time to arrange the movers and get the keys because you are now a homeowner!

Congratulations! You are now a homeowner!

Bonus Infographic: Step-by-step Guide To Buying A House

As an added bonus, we have detailed the home-buying process in an infographic. You can use this as a checklist to help you go from finding to settling your new home.

Bonus: Common Mistakes To Avoid

New doesn’t equal no problems.

A new house may sometimes have problems.

It can be pretty alluring to buy a brand-new property. It’s like buying a new car: You’re the first person to sit in it, and you think everything’s new, including the warranty. It makes a lot of sense, right? Not always. New buildings can have issues with concrete cancer, etc. So, you need to be diligent in checking out strata reports to make sure it’s going to make sense for you to buy new. 

This is where an older block of units can be amazing. If they’ve been there for 30 years, they’ll likely be there for another 30 more.

Don’t skip the building & pest inspection

Another small mistake we see commonly made is skipping the building and pest inspection. If you can take some time off work, sit down when the Building and pest inspector is going through your new prospective home and understand what they’re seeing. If there are any issues, they’ll tell you on the spot, and you can potentially use any issues that the building and pest inspector flags to renegotiate the price down or if the issues are too big, you can walk away.

Not going through the house in detail

The building and pest inspector will not check every power point so make sure to check them yourself.

Once you buy a home, it’s your problem: The good, the bad and the ugly. With a home, you’re buying in the condition that you’re seeing it in. so if you’ve made an offer and it’s accepted, and you’ve still got your Finance clause or building and pest clause, take time to do a second inspection and go through the home in detail. Your building and pest inspector, unfortunately, isn’t going to check every power point and all the appliances. 

One of the simple things you can do is turn on all the light switches in the house to ensure they work. If there are bulbs out, you can get this fixed up before you go unconditional in the contract. If there are power points, bring just a simple little socket. We’ve had some clients go as far as bringing a clock radio and testing power points to make sure they work because if they don’t, it’s going to be your responsibility to get an electrician in to fix it up.

Good Neighbours are Important

Good neighbours are important when buying a home.

As the saying goes, you can choose your friends but can’t choose your neighbours. When you’re buying a home, you’re hoping to be there for a couple of years, and a bad neighbour can turn a beautiful new home into a horrible experience.

So, the best way to guard against this is to look around the street on your first inspection. Have a walk around, and get a feel for your neighbours. For example, if there’s junk in the neighbour’s yard, it will likely be there when you move in. Also, try to drive by Friday or Saturday night just to get a feel for the potential neighbours and what kind of people they are. Are they big party animals? Are they quiet? It’s nice to know what you’ll be in for once you move in. 

Check out the local area

Check out the convenience of food, public transport and groceries. This is something you may not think much about until you have kids and it gets more important later in life. Are there nice walking paths nearby? Can you walk or ride a bike to local shops, or do you have to pop in your car? A great tool to check this out is Walk Score. You can literally put in the address, and it’ll give you a quick score to tell you what amenities are available and how far they are from your house.

Skipping the bad photos

Nice looking photos often lead to bidding wars.

Usually, everyone is looking for good photos, and if the listing has good photos, it can lead to bidding wars. However, if there are really crummy photos, it could mean you’re the only person turning up because people usually give a wide berth to photos that are not good. So don’t skip the bad photos, as you may be able to get a good deal.

The difficult thing with real estate is it can take a couple of goes to find the right one. So you might go through a bunch of crappy photos which could turn out to be as crappy as the photos look in real life. You’re just going to have to go and check them out.

Well-maintained but poorly presented homes offer better value, so keep that in mind when you’re on the hunt.

Don’t take too long to make an offer

We’ve seen this time and time again: The market can move. During COVID-19, the market was really slow, and properties were sitting on the market for 2-3 months. You could take your time to casually check out a property online, do inspections, and make an offer—it was a real buyers’ market. You had the control.

In the current market, in many places around Australia, the days on market are under 30 days. 30 days means from when it’s listed to when it’s sold and potentially settled, so stuff is selling really quickly. Offers are being made before the first open home, and you need to be aware of this. 

Not knowing who the real estate agent is really working for

There are some really good estate agents who are genuinely out there to help sellers and buyers and bring people together. But there are also a lot who aren’t like this. 

You must remember that real estate agents aren’t licensed financial advisers; they can’t give you tax advice, they’re not registered tax agents, and they can’t talk to you about negative gearing and the benefits around that. Real estate agents aren’t the local Council or town planners, so take any advice about rezoning with a grain of salt. 

At the end of the day, a real estate agent’s job is to sell the property for the most money in the least amount of time possible. Don’t take it personally; you just need to take it as it is and understand what you’re playing with. 

Next Steps For Home Buyers Looking For Information

Our team here at Hunter Galloway is here to help you buy a home. 

Unlike other mortgage brokers who are just one-person operators, we have an entire team of experts to help make your home loan journey as simple as possible.

If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.

Our team of home loan experts is here to help you buy a home in Australia.

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