Buying property in Australia: the process of buying Australian real estate

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Buying property in Australia: the process of buying Australian real estate

The process of buying Australian real estate

Buying a property can be both exciting and stressful. When you are purchasing a real estate in a different country it can come with some added challenges. Before you start your search for a property there are some things you may want to consider.

  • What type of property are you eligible to purchase in Australia?
  • Decide what type of property you are looking for and the location in which you want to buy.
  • Research the property market.
  • Know the costs of with buying property and the ongoing costs of owning property.
  • Obtain finance to complete your purchase?
  • Make an informed property purchase.

the process of buying Australian real estate

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Preparing to buy property in Australia

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Let us guide you with your property purchase

As a non-permanent resident there may be restrictions around the types of property you can purchase. The Foreign Investment Review Board of Australia processes all applications for non-permanent residents

For further information please refer to: www.firb.gov.au

Decide what type of property you are looking for and the location in which you want to buy.

If you are buying a property to live in the considerations may be quite different from if you are buying an investment property. Proximity to employment, and amenities can improve your lifestyle if you plan to live in the property and improve the performance of an investment property.

If you are not familiar with the Australian property market, it is essential to seek assistance from reputable qualified professionals who assist you.

If you need to find reputable professionals (e.g. solicitors, accountants, buyer’s agents) we can help. Ask us for a referral.

Research the property market. There are a number of tools available which allows you to check recent property sale prices for each area, and research expected future economic trends. To research properties you can use www.realestate.com.au and www.domain.com.au . Websites such as www.propertyvalue.com.auwww.onthehouse.com.au and www.onthehouse.com.au offer property price range or estimates and suburb profiles. Local estate agents will also have access to this information so you can price compare but be warned that real estate agents are work work for the property seller and may be selective in the sold prices disclosed in an attempt to inflate the price that they get for their vendor (seller).
If you do not have all of the funds required to purchase the property there are a number of loan options available. The Australian home loan and investment property loan market is very competitive but it can also be complex and confusing. There are many different Banks and lenders each with their own different home loan and investment loan options. Furthermore, each Bank and lender has their own credit policy which determines who they will lend to, and under what conditions (how much they will lend depending on your situation). Some lenders will lend to non-residents but it will depend on if they are offshore investors or if they are living in Australian on a temporary visa the type of visa, length of stay and other aspects. A Mortgage Broker such as Oak Laurel that specialises in non-resident lending has access to the lenders and loan options for non-residents and can save you time and money when finding a loan. We can present you with your options and outline their costs and terms.
Once you have decided to purchase a property it is highly recommended that you engage a solicitor/conveyancer. Your conveyancer will guide you through all the legal aspects of your purchase. Some conveyancers will review the Contract of Sale for your proposed new purchase prior to you purchasing the property. This should identify any clauses that are not standard and they can then explain the consequences of these clauses to you. Use FindLaw directory to begin your search.
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Getting a home loan or investment property loan in Australia

 
Most Banks and lenders will require you to have a minimum deposit of 20% of the purchase price (you will also need funds to pay Stamp duty and the other costs associated with buying a property). Some lenders will allow for a smaller deposit, this is usually associated with the type of temporary visa you are on if you are a temporary resident living in Australia.

Larger deposits are required in some circumstances such as foreigners living overseas that are buying an off the plan property.

If some or all of the money you are using for the purchase of the property are located offshore, it is a good idea to transfer those funds into an Australian bank account well in advance of the settlement data. That means you will not need to transfer the funds urgently or risk delaying the purchase. It will also mean that you are not at risk of a negative currency changes.

A home loan or investment property loan pre-approval is where the bank of lender approves approves a specific loan amount to you. But beware some pre-approvals are not what they seem. Some lenders will provide pre-approval letters without their ‘credit department’ reviewing your application. Many people have taken this letter to mean that the lender guarantees that they will lend them this amount of money and purchased a property only to find out later that the bank has rejected their application when it was assessed at the ‘credit department’.

A better pre-approval is a conditional approval that is only conditional to the ‘valuation’ (bank’s estimation of true market value and level of risk a specific property) of the property that you are buying. A conditional approval allows you to bid at auction and submit offers with confidence because you know that your loan has been conditionally approved.  Pre-approval are generally valid for 3 months while you search for your property. We can help you to obtain a conditional approval.

This will depend on which Bank or lender you are applying for a loan. Typically, you will be required to provide proof of identification, evidence of income, and details around your current financial position (assets, liabilities, income and expenses). The Bank or lender will use this information when assessing your ability to repay the loan.
 

Buying a property in Australia

 
There are two main ways of purchasing a property in Australia:

Auction

Properties are usually sold by auction when demand is high. If you are the successful bidder you will be required to sign the contract of sale immediately and immediately pay a 10% deposit (unless you make alternative arrangements with the vendor prior to the auction). When sold at auction the contract will be unconditional (you will not be able to cancel the contract without paying an expensive penalty). Therefore it is advisable that you have your finances sorted out (preferably a conditional pre-approval if you need a loan) and know how much you can afford to pay for the property before you bid.

Private Treaty

Private treaty is when a property is offered for sale at a negotiated price. The normal practice is for the vendor (the current owner of the property) to set the price and you negotiate with them until a mutually agreeable price is reached. The terms of the contract can vary. There is a two day cooling off period after the contract is signed by both parties. Usually 10% of the purchase price is required as a deposit once the contract is signed. In some States sellers will allow purchasers to purchase ‘subject to finance and valuation‘. This can allow the purchaser to arrange finance and obtain a valuation from their bank or lender to ensure that they can obtain finance for the property.

The contract of sale is generally prepared by the agent or the vendor’s solicitor. Ensure that your solicitor / conveyancer reviews the Contract of Sale before you sign anything.

Let your mortgage broker know as soon as possible if you have signed a contract of sale. This will provide as much time as possible for your mortgage broker to arrange your finance.

Once unconditional on the purchase your solicitor/conveyancer will handle most pre-settlement conditions and will liaise with all relevant parties and inform you when the transaction is complete and you are the owner of the property.
 
 

Information about loans for foreigners living overseas

Find out more information for foreigners living overseas that want to finance a property purchase in Australia.

 

The costs involved in purchasing a property in Australia

There are a number of costs involved when purchasing property, as well as before and after you buy. These are some costs which you can expect to pay:

  • Stamp Duty of Transfer: this will vary depending on which state you are buying. See more info here about Stamp duty;
  • Building and Pest Reports: it is highly recommended that building a pest reports be obtained. If you are buying an apartment building reports are generally not needed. Check the body corporate report instead;
  • Legal and conveyancing costs;
  • Financing costs – this will vary depending on the Bank or lender you use;
  • Home and contents insurance. Most Banks and lenders will require that you have home insurance that insures the building that you are borrowing to purchase. Ensure that you ensure any property that you have an unconditional contract to purchase;
  • Moving costs and utilities (water, sewage, electricity, phone, internet);
  • Ongoing council rates; and
  • Ongoing body corporate/strata fees – these are generally payable when purchasing apartments and units.
 

Need an Australian mortgage broker?

Our Australian mortgage brokers can assist you to get a home loan or investment property loan for your Australian property purchase.

 

Our Panel of Lenders

Our mortgage brokers have access to a large panel of lenders, this means that we can offer you a wide selection of home loans.

SuncorpRAMS home loansRESIMAC home loansSt GeorgeMortgage brokers Canberra - finance brokers Canberra - wide bay australiaWestpacVictorian mortgage groupPepperNMCNABmkm capitalME BankMacquarie bankLiberty financialLa Trobe financialING DirectIden grouphomeloans ltdHeritage BankFirstmacEclipse prudent mortgage corporationEZY MortgageCommonwealth BankCitibankBluestoneBeyond the banksBetter mortgage managementBankwestBank SABank of QueenslandANZBarnes home loansBank of MelbourneAMPAll State Home LoansAdelaide bankThe Rock Building SocietyWell Nigh home loansThink tank commercial financescottish pacific business finance

Please note: not all of our mortgage brokers offer products from the lenders listed here.

 

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