Buying a House in NSW

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  1. The process of buying a house (NSW)
  2. What takes the longest when buying a house
  3. What deposit is needed to buy a house
  4. Does pre approval mean you get the mortgage?

Whether you’re a first home buyer or getting into property investment, finding the perfect house and making the right deal can be daunting. It involves proper planning, research, and careful budgeting. That’s why we’ve broken down the process of buying a house so you know exactly what to expect at each stage.

If you have any questions about how to buy a house, please don’t hesitate to get in touch with our experienced conveyancers.

The process of buying a house (NSW)

1. Organise your finances

The process of buying a house starts with getting your finances ready. To buy a house, there are a few things you’ll need:

  • A deposit or a guarantor for your loan
  • Some additional savings to cover the extra costs of buying a house
  • Home loan pre-approval (not necessary, but it is recommended)

Before you start looking for a house, it’s important you know your borrowing capacity. You can determine this through your mortgage broker or lender. They’ll do an assessment on your income and debts, and then let you know the maximum amount of money you can borrow.

Home buyer grants

We also suggest you check if you’re eligible for the First Home Owners Grant. This is a national scheme, funded by the Federal Government and administered through each state and territory revenue office. Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria. The amount available varies from one state to another and ranges from $5,000 up to $25,000 for first home buyers.

If you’re building, you may be eligible for the HomeBuilder Grant instead.

2. Market research

Before you start searching for the perfect house, you must have a clear idea about the kind of house you are looking for and your preferred locations. A bit of homework will save a significant amount of time. Once you know your borrowing capacity, it becomes much easier to search and inspect houses within the price range.

You should consider the following things before deciding on a house:

  • Proximity to schools, shopping centres and other public facilities like parks and sporting grounds.
  • Public transport and amenities.
  • If there are any restrictions on the property like easements, heritage listings or caveats.
  • The condition of the house.

Learn more: caveats on property

3. Make an offer

Once you’ve found the house of your dreams (or your dream investment), the next step in the process of buying a house is making an offer. If it’s by private treaty, you’ll make an offer either directly to the vendor or through their real estate agent.

If you’re buying a house at auction, you’ll need to register yourself as a bidder. In case you are successful at the auction, you will be required to sign the contract of sale and pay the deposit as soon as the auction finishes.

You should arrange for a building and pest inspection and/or a property valuation before the auction day, as you will not be able to make the contract subject to any conditions. You are also not entitled to a cooling off period.

Learn more: private sale vs auction

  1. Exchange of contracts & the deposit

After reviewing the contract of sale, you and the vendor are both required to sign a copy of the contract so it becomes legally binding. This is known as the “exchange of contracts”.

After the contract has been signed, a deposit on the purchase price is payable.

In case you are buying a house at auction, you need to sign the contract and pay a deposit, usually 10%.

Learn more: is a house deposit refundable?

  1. Cooling off period

If you are buying a house through a private treaty, you will have a fixed number of days as a cooling off period (usually 5 working days). During this period you may change your mind to withdraw yourself from purchasing the property without any legal repercussions. You may however lose your holding deposit.

The cooling off period is usually calculated from either the date of the contract signed by you and the vendor, or from the date of receiving the vendor’s statement.

In case you are buying a house at auction, you will not be entitled to a cooling off period.

Learn more: what is cooling off period?

  1. Settlement

The final step in the process of buying a house is settlement day. This is when you will take the legal ownership of the house. This is normally 6 weeks after the exchange of contracts. On this date, the legal documents of the house are transferred from the vendor’s name to yours. The adjustment of rates and taxes are calculated, and the balance amount of the purchase price of the house is paid to the vendor.

You will be represented by your conveyancer during the settlement process. After completing all the formalities, you will be provided with the keys of the house and you may take possession or rent it out to somebody else if the property is an investment property.

Learn more: property settlement process NSW

Speak to Owen Hodge

The team at Owen Hodge Lawyers can help you navigate the process of buying a house and assist in all aspects of the transaction. If you have any questions about the things to know before buying a house in Australia, please don’t hesitate to get in touch with our conveyancing or property lawyer team. Schedule an initial consultation by calling 1800 770 780.

FAQs about the process of buying a house

What takes the longest when buying a house?

It ultimately depends on the buyer and seller’s circumstances. Sometimes it can take a while to find the perfect house, while others may experience delays with getting final mortgage approval. The settlement process can also take time if the purchase of a house is dependent on the sale of another.

What deposit is needed to buy a house?

In Australia, buyers usually aim to have a deposit of 20% of the full value of the house. However, there are a number of grants available that enable you to get a house with a smaller deposit.

Related information: is house deposit refundable?

Does pre approval mean you get the mortgage?

Pre-approval means that a lender has agreed to lend you the money (in principle), but it doesn’t guarantee you’ll get the loan. You still need to make a formal application for the home loan and there may be a chance you are rejected if:

  • There has been a significant change in your credit score
  • You recently changed your job
  • You lost your job and there’s not enough income to support the repayments of the mortgage

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