buy a house in Australia

How to buy a house in Australia – First steps explained!

So, you’ve decided to make your mark on the property ladder and purchase your first home, congrats! Now comes the more challenging bit: getting your finances, contracts and everything in between sorted.

As a first-home buyer, you might think the first step to take when buying a house in Australia is to find the right property. This is indeed an important part of the process, however, getting the money to buy that home is something even more important if you consider applying for a mortgage.

Can you imagine taking months to find the perfect house in the best location and right before making the offer you find out you are not eligible for a loan? Or that you can’t afford the house because you are not able to borrow that amount of money? It happens a lot more than you think.

This can be not only frustrating but also time-wasting, meaning the market might completely change in the meantime and this can make you lose money. At Capta Financial, we believe in empowering our first-home buyers and investors through education, which is why we’ve decided to put together this blog, so you’re prepared for all the initial steps that come with property ownership.

So, before attending auctions or spending hours browsing the internet for the perfect home for you and your family, let’s understand how things work and what are the very first steps that will enable you to buy your first home in Australia.

The first step to buy a house in Australia:

Getting a pre-approval

Before you can get to house hunting, it’s important to know where you stand financially by obtaining a pre-approval from the bank. The pre-approval is an agreement from the bank you are looking to borrow from, stating that they are willing to lend you a certain amount of money to buy a house.

Although this is a crucial arrangement, it is important to highlight that the pre-approval does not guarantee your loan will be approved. This is only an initial agreement that will be pushed to a written document (which will require a much more complex process) once you are ready to purchase the property.

“Well, if it doesn’t guarantee me a home loan, why bother?” We’re glad you asked. 

This is one of the most important steps to take when planning to buy a house in Australia because it allows you to know your maximum available funds to organise the price range and focus on houses you can afford. Besides, it makes your offer much more attractive to the seller, once it shows you have higher chances to get the loan approved for a successful purchase.

While every lender’s process differs, home loan pre-approval can take anywhere between a few hours to a few days. The timeframe also depends on factors such as the lender’s workload, the complexity of your financial situation and how quickly you can provide the necessary documentation needed. Let’s take a look at some of the information your chosen lender may ask for below. 

How does the loan pre-approval work?

To get approved for a mortgage, you will be requested by the bank to provide some documents to prove your financial capability and stability. Documents may vary from bank to bank and case to case, but in general, what you might be asked to provide is:

  • Proof of identification
  • Proof of income
  • Proof of Savings
  • Proof of debits
  • Bank Statements
  • Proof of employment

This is to gauge your financial suitability for the loan to determine how much you can comfortably afford to borrow and whether you are able to make your repayments every month. 

If you are a self-employed worker seeking a home loan pre-approval, be prepared to provide some extra paperwork related to your activities in order to prove your financial stability. Some examples are invoices, tax returns (individual and the business), and business financial statements.A pre-approval process does not take much time to be ready: it will vary from each bank, but it normally takes some business days. The agreement usually lasts from 60 to 90 days, which means plenty of time for you to find the right house for your family to buy.

What comes next?

Once you have gained pre-approval from the lender, the next step is to find your dream property and make an offer. Once your offer is accepted, you proceed with the formal loan application process, taking you one step closer to gaining the keys to your new home!Having trouble finding the best home loan for you? The incredible team of mortgage brokers at Capta Financial can help.

How to choose the best home loan lender to buy a house in Australia?

Home loan rates can vary from one bank to another and even a small percentage can help you save a significant amount of money in the long term. However, when seeking a pre-approval it is not recommended to get it from multiple banks, once this can harm your borrower history.

This is why using a Mortgage Broker will make your life easier (not to mention faster and cheaper) when choosing the right place to borrow from or get your pre-approval. If you are planning to buy your first house in Australia, please contact us. We can guide you through your financial journey and help you find the most suitable lender for your needs.

Scroll to Top