The Australian property market is hot – and has been on the boil for the last couple of decades. If you’re a new arrival into Australia and want to settle down in the land down under, there are some things to consider before dipping your toes into buying. I’ve put together 6 tips for buying a house in Australia to help you through this daunting process.
Figuring out your budget
You will need to know this figure first before even venturing out into the market.
The first thing you can do when you start looking into buying a house is check your credit history. You can do this for free once every year at an official credit reporting bureau. This will tell you if you have good or bad credit, as this can affect if you’re approved for loans and for how much.
If you’re new in Australia and not yet a permanent resident or citizen, you may not have an official credit history. For more information about accessing your credit report in Australia, visit the Office of the Australian Information Commissioner.
If you haven’t worked out your monthly income vs expenses, grab my handy cost of living calculator now!
Investigate home loans
Once you’ve got your credit sorted, you need to investigate home loans. You should start by looking at the current interest rates, what loan term may be best for you, whether your chosen mortgage product has a redraw facility or not, if you can make extra repayments, if there is an option to have an offset account, and how often interest is calculated and added to your loan.
The best way to compare two (or more) home loans is to look for comparison rates. This is a home loan interest rate with most fees included. With so many lenders and banks offering home loans, you may also want to talk to a reputable home loan broker, who can sift through all the options and help you choose a loan that’s right for you.
Remember to factor in other costs
But it’s not just about your mortgage. All houses in Australia come with additional costs including a usually hefty deposit – sometimes up to 20%!
If you don’t have a sufficient deposit, you can get Lender’s Mortgage Insurance (LMI), which is an additional fee that can be added to your mortgage.
You’ll also have to pay for stamp duty, which you can calculate here. You also must factor in legal and conveyancing fees, building inspections, and pest inspections. This can add tens of thousands of dollars to the costs of buying a house in Australia.
Look for houses that suit your lifestyle – and budget
Depending on your budget, you may have to make compromises about what suburb you’re looking at buying into, the size of the house, and whether it’s near amenities. For example, the median house price in North Beach is $1,175,000, while Secret Harbour has a median of $485,000 – though it’s a fair cry south from Perth CBD.
When it comes to buying a house in Australia, as we say in South Africa, ‘n boer maak ‘n plan. If the first house you have your heart set on disappears due to demand, have several others on your shortlist that suit your lifestyle – as long as there’s room to braai,right?
Be prepared to do a lot of inspections
You should be prepared to inspect a lot of houses at open inspections – watch out for sagging walls, mould, leaky plumbing, lights and fuses, the roof and guttering, and exterior walls for cracks or damage. Before you commit to any house, you should invest in an independent building and pest inspection to save a lot of potential headaches later on down the track.
Do you need a buyer’s agent or advocate?
If you’re busy as a bee – and who isn’t these days – you can opt to engage the services of a buyer’s agent or advocate to find houses for you.
They aren’t common: only 5% of home sales in Australia involve a buyer’s advocate. They can however do all the heavy lifting in terms of searching for a home, negotiating on your behalf, and closing the deal. They may take a commission or set a fixed price; but it can save you a lot of time, and also help you to secure the home of your dreams.
What are your best tips for buying a house in Australia? It can feel like a scary process so help a fellow expat by leaving your top tip in the comments below!
Remember, this advice is general in nature and not a substitute for professional financial advice.