How to buy your first home

The journey of buying your first home can be a daunting one, so it can be helpful to know what happens when, who does what and what you need look out for. That's why we've pulled together this step-by-step guide to help you become a first time property pro.

  1. Get your finances in order
  2. Shop around for the best home loan deal
  3. Loan pre-approval
  4. Find a good solicitor or conveyancer
  5. Enter the market
  6. You find the 'one' - it’s time to make an offer
  7. Contracts are exchanged
  8. Deposit is paid
  9. Organise insurance
  10. Conduct due diligence
  11. Pre-settlement inspection
  12. Settlement
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Step 1: Get your finances in order 

Before you even start looking at properties you should have a very clear idea of how much you can afford to borrow while being able to live comfortably with the repayments. You'll also want to have your deposit saved (ideally 20% to avoid paying lenders mortgage insurance) and be fully in control of your budget and expenses in order to give yourself the best shot at getting approved.

To see whether you’re really ready for the financial commitment of home ownership, have a read of our article on the 5 tests you should pass before taking out your first mortgage.

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Step 2: Shop around for the best home loan deal

Just because you are a first time buyer doesn’t mean that you shouldn’t negotiate on your home loan. You want the best possible rate you can get, right?

With some of the most competitive interest rates for owner-occupier borrowers now below 2.50%, it's certainly worth shopping around to find a loan that will keep your costs as low as possible. Our home loan comparison tables make comparing a range of offers super easy because you'll be able to compare rates, fees and features on a heap of different loans all in the once place. 

If negotiating isn’t your strength, think about getting help from a mortgage broker or home loan negotiator. We have a free home loan negotiator service to help you get a better deal on your loan, and our experts deal with the banks everyday and know what discounts first time buyers can and should get.

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Step 3: Loan pre-approval

Once you’ve chosen a lender, it is a good idea to proceed with getting loan pre-approval. Most banks will give you conditional pre-approval for a home loan up to a certain limit, based on the information you provide confirming your income and commitments. Conditional pre-approval generally lasts between three and six months, so if you haven't managed to find a property during this time you’ll need to reapply. 

Pre-approval helps you to ‘house shop’ with more confidence and it can mean that when the time comes to put in an offer you are able to act fast.

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Step 4: Find a good solicitor or conveyancer

A solicitor or conveyancer ensures that when you buy the property you will be the rightful owner. They will ensure that your ownership rights are not restricted by caveats on the title, easements, or local government rules, and that any mortgage held over the property is discharged before you take possession. They will also guide you through the contract negotiation process.

So how do you find one? Do your research online or ask friends and family who have bought recently for a recommendation. Both solicitors and licensed conveyancers are qualified to undertake the legal work involved in buying property so the choice of who you decide to use is up to you.

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Step 5: Enter the market

If you haven’t already, now it is time to decide on the area you want to put down your roots in and plan your attack for securing your first home. Unless you are buying off the plan, you’ll be spending a lot of time on the internet looking at property listings and your weekends will be spent viewing open houses. It’s also a good idea to attend property auctions - both to get a feel for the types of properties and the sale prices in your area, and to witness the process for yourself. 

If you haven't already, think about the different property seasons and when you might want to enter the market. Typically Spring and Autumn tend to be the busiest seasons in Australia when the largest volumes of property are up for sale, while Winter and Summer are much quieter.

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Step 6: You find the ‘one’ - it’s time to make an offer

You find the house, apartment, terrace, mansion of your dreams and you’re ready to make an offer.

There are two main ways that properties are sold in Australia and depending on what method the seller is using, there are different requirements and processes to follow. The two options are buying at auction and or private treaty. 

Regardless of which method you will be buying under, the real estate agent representing the seller will need to give you a copy of the “contract of sale”, which outlines the terms of the sale and details of the property. Get your solicitor or conveyancer to look over the contract of sale before you bid or make an offer.

Buying at auction:

If the property you want is up for auction, it is possible for you to make a pre-auction offer. The vendor does not have to accept pre-auction bids, and even when the vendor is considering your offer, the property is ‘still on the market’ so its possible that another party could gazump you with a better offer.

If you have to proceed to auction day, you will need to ensure you have done all of your due diligence prior to the auction as there is no cooling off period. This means your solicitor should have reviewed the contract, you have your finances in order and your deposit ready (at auctions a 10% deposit is required on the day) and you’ve done the necessary building and pest inspections.

If you are the highest bid at the fall of the hammer after the property was declared ‘on the market’ you will purchase the property.

Buying via private treaty:

This when a property is put on the market with a specific price and you negotiate with the seller usually via the real estate agent. Generally you will put in a written offer and you and the vendor may go back and forth until you reach an agreement and your offer is accepted.

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Step 7: Contracts are exchanged

Once your offer is accepted by the vendor you’ll exchange contracts. Your solicitor or conveyancer will support you through this process. The final contract will include:

  • price
  • settlement date
  • caveats
  • sewer and drainage diagram
  • zoning restrictions
  • survey (optional)
  • special conditions: this will be things like subject to finance approval, building inspection or pest inspection. Also some buyers negotiate longer or shorter settlement periods. Your solicitor will discuss with you your options and include any special conditions on your behalf.

There will be two identical versions of the contract, one which you to the buyer signs and a duplicate that the seller signs. You then ‘exchange’ the contracts so that you keep the copy that the seller signs and vice versa.

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Step 8: Deposit is paid

The amount of deposit can vary, but the standard amount is 10% of the purchase price at exchange. If you bought your property at auction this will be required on the day. The deposit will be held in a trust account (generally with the seller’s real estate agent) until settlement.

Settlement is generally 4 - 6 weeks from the date of exchange, unless you have specifically negotiated a shorter or longer settlement period.

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Step 9: Organise insurance

It is recommended that as soon as you exchange contracts you get your building insurance in place. Generally you can get a cover note for the period up until the settlement date and the policy will begin on settlement along with your contents insurance. If you are buying an apartment you will need to arrange a ‘Certificate of Currency’ from the body corporate’s insurance provider to make sure the property is adequately covered.

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Step 10: Conduct due diligence

If you have a cooling off period in your contract (the length of this will vary by state) or special conditions that were agreed to, now is the time to conduct your final due diligence. This would be such things as pest inspections, building inspections and finance approval.

If you have a conditional offer with your home loan lender, now is also the time to get final unconditional approval of your home loan. If you are eligible for any first home owners grant your bank will usually organise this for you and have it ready for you at settlement.

The application process will be slightly different with each lender but generally this will include the following steps:

1. Submit your final application and supporting documents including things like recent pay slips, savings and bank account statements, signed application form.

2. Lender completes employment check and property valuation

3. Full application is reviewed by lender

4. The loan gets approved

5. Loan documents get sent to you to sign

6. Signed documents returned to bank

7. The loan gets certified ready for settlement

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Step 11: Pre-settlement inspection

Before you take possession of the property you are generally entitled to a final inspection of the property. This allows you to confirm that nothing has been damaged or changed since you agreed to buy the property, beyond general wear and tear.

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Step 12: Settlement

Your solicitor will arrange settlement with the vendor’s solicitor and liaise with your lender to organise for the remaining funds to be available on the time and day of settlement. On settlement day, your solicitor will contact you to let you know that settlement has taken place. They will also send you a Statement of Adjustment to show you how the funds have been paid to all parties.

Congratulations, you’ve bought your first property. It’s now time to pick up your new keys and pop the champagne!

Have some more questions about the home buying process? Head on over to our first time buyer hub to check out our guides and tips.  

Home Loan Comparison Table - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

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