Getting a Home loan in Australia

Getting a Home loan in Australia
Home loans in Australia, Property finance

Buying a dream home? Find the best home loans in Australia with low interest rates, and additional benefits for homeowners.

You want to have your own place and to enjoy all the benefits of home ownership including personal satisfaction and pride. At the same time, you feel slightly nervous about making such a major step in your life and you are not sure where to start.

A Beginner's Guide to Buying a Home in Australia

Now is the time to calm down and to focus on the task at hand. Buying a home is probably the largest financial investment which you will ever make so you have to do your best. You need to ensure that the whole process will go smoothly and that you will get the best result in the end.

You need to be fully aware of all the stages and aspects of the home buying process. The more knowledgeable you are, the better you will do.

Here you will find all the information which you need on buying a home in Australia.

Take the time to read carefully so that you can use it effectively.

The Decision

If you have doubts about the purchase of a home, you should think things through before making a final decision. Even though homeownership is a tradition in most communities, it may not necessarily be the ideal option for every modern person. You need to make a choice based on factors such as your lifestyle, occupation and family situation.

Compare renting vs homeownership

If you have small savings or not particularly good credit history, you may need more time to prepare for buying a home. As a renter you will have fewer responsibilities compared to a home owner. When you buy a property, however, you will be able to accumulate wealth and use it effectively in the future.

Review the benefits of buying a home

In general, homeownership is more beneficial compared to renting. In addition to wealth building, you will enjoy pride and happiness. As an owner of a highly valuable asset, you will have greater financial flexibility.

It pays off to make the extra effort required in order to become a home owner.

Consider the relationship between home purchase & marriage

It is easier to get finance when you apply for a home loan jointly with your spouse.

Together, you can generate greater savings for the deposit as well. It is common for people to buy a home after they are married and before they decide to have children. However, this does not mean that you should not purchase a property if you are single. You should definitely do it if you have sufficient income and savings and if this is exactly what you want.

Finance Preparation

You need perfect financial preparation before you can buy a home in Australia. You need to confirm that you are able to afford a loan and to qualify for it.

You need to be aware of the different mortgage options which you have as well.

1. Check and repair your credit report.

You need to get the free credit report which you are entitled to and check it for errors. If you find any, you must have them fixed. If you have any debt which has been around for a considerable period of time, you need to clear it as soon as possible. In general, you will stand higher chances of approval if you have lower debt-to-income ratio.

2. Find a lender.

Compare home loans from as many lenders as possible.

Base the comparison on interest rate, fees and repayment term and schedule. You should definitely check with your bank as you may get a special deal as an existing client. You should also consider using the services of a mortgage broker who will be able to find a loan which matches your requirements precisely in a fairly short period of time.

3. Prepare a deposit.

Home loans typically require a deposit. This is your contribution to the purchase price of the property. The rest is provided by the lender. A bigger deposit will result in a smaller loan amount. This has several major benefits. You will stand higher chances of approval, save on interest payment and gain larger equity in the property from the start.

4. Consider government help.

There are two forms of government help available to first home buyers in Australia. These are a first home saver account, which will help you to produce the required deposit, and First Home Owner Grant, which you can use directly for the purchase of the property.

5. Try to get preapproved.

With a preapproval for a home loan provided by a lender, you will have more negotiating power when you deal with the seller of the house.

Home Buying Assistance

It is possible to search for a property by using the for-sale listings available online. However, it is certainly more beneficial to use the professional services of a real estate agent. You will get valuable assistance with selecting the right property and with making an offer.

1. Why hire an agent.

With professional assistance, you will avoid making costly mistakes. You will certainly get the ideal deal for you.

2. How to find an agent.

You should use personal recommendations in addition to comparing service providers on the internet. You should choose an agent who is experienced and has a high achievement record.

3. How to work with an agent.

You should outline your requirements clearly and ask all questions which you have on the selection of a property and on the buying process. You have to have a clear idea about the cost of the service and read the agreement carefully before signing it.

Home Buying Mistakes to Avoid

You should be aware of the most commonly made buying mistakes so that you can avoid them. It is always better to learn from the mistakes of others rather than from experience.

1. Don't get limited to print ads.

An online search is the more efficient and more cost-efficient option. You will get access to a lot more properties. You will get plenty of details and pictures as well. This will help you to narrow down your search for properties more easily and to save time and effort when it comes to making enquiries and visits.

2. Don't make a visit without professional preview.

It is time-consuming and inefficient to visit all properties which have made a good impression on you during your online search. It is best to have your agent preview them for you so that you will know of any flaws in advance. If the agent has good news, then she can arrange a visit.

3. Don't ruin your efforts in the last minute.

It is a huge mistake to make big purchases right before buying a house as this may have a negative impact on your home loan terms and conditions, especially if you take out another loan to finance the purchase. Additionally, you should not leave your deposit unprotected. Use appropriate measures to safeguard your equity in the property which you get right from the start.

You must be perfectly sure that you have chosen the right property at the right location.

Dealing with the Seller

It is common for the buyer and seller to enter into negotiations for the sales price of the property. That is why you should know how to use this opportunity to your best advantage.

Make a competitive offer

The real estate agent will be able to give you specific advice based on the current situation in the respective real estate market. The offer will certainly be for a lower than the listed price, but you have to make sure that it is not too low. If there is competition, you can boost your competitiveness by presenting home loan preapproval and/or by placing a larger deposit. You may want to include some personal details to give the seller a piece of mind that their home will go to a good family. The document which your agent will present to the seller must be clear and concise.

Protect your interest in the best way

Once you have agreed on a price with the lender, you can sign the sales contract immediately or make a verbal agreement. The problem with the former is that you will have a cooling-off period of just 5 days which is typically not enough for running all inspections and checks. The problem with the verbal agreement is that if a higher price bidder shows up in the mean time, you can lose the deal. That is why specialists typically recommend signing the contract immediately after agreeing on a longer cooling-off period.

Finance Securing and Property Inspection

You need to get the home loan approved based on the property sales contract. You have to be certain that the property is in good condition and that there are no legal issues with its ownership whatsoever. For this, inspections and checks must be carried out.

Work with the lender

Once the lender has the property sales contract, they will decide whether to run valuation or to approve you straight away. Either way, you can expect the process to be fairly quick.

Request pest and building inspection

Your agent will be able to recommend a reliable and affordable service. There are companies which run both types of inspections.

Run title and strata searchers

Your conveyancer will take care of these tasks to confirm that there are no legal barriers to purchasing the property.

Finalising the Deal

The date of settlement in Australia is usually around six weeks after signing the sales contract. You can expect to receive the home loan documents within a week of approval. The sooner you sign them the better, but this does not mean that you should not read them carefully and confirm that everything is as it should be. You should definitely focus on the financial and legal matters that you have to take care of as a property buyer, but you should also take care of the following things.

Organise the moving

It pays off to book a moving service in advance so that you can eliminate the last-minute search hassle.

Buy home insurance

You need to protect your property by getting home insurance in the best possible way right from the start.

You are now better prepared for buying a home in Australia.


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