17 July 2026 | See disclaimer
Purchasing a new home can be one of the most exciting and biggest investments you may make in your life. It’s a journey that comes with careful planning and important decision-making.
Whether you’re looking for an investment property or that special place to call home, buying property is a significant financial commitment. And a key part of that commitment is responsibly protecting your new property with the right home insurance.
A policy can safeguard you against risks that could cause loss or damage your home, such as storms, fire or theft. Home insurance is not only essential to protect you against such unexpected events, but it’s typically a standard requirement from most mortgage lenders, who use the home security for the loan.
Having your home insurance arranged and in place is an important financial safeguard and it is vital to factor this into your budget.
Although the home-buying journey can sound daunting, if you’re not sure where to start, this step-by-step guide can help you prepare.
Finance Checks
Finance is one of the biggest factors to consider when buying a house. From saving up for a deposit to applying for a loan with your lender, it helps to know what’s involved from the get-go.
Home Deposit
A home deposit is your upfront contribution to the purchase price of a property. Your chosen lender will cover the remainder of the purchase price, which you pay back, with interest, over time.
Most lenders recommend saving at least 20% of the property’s purchase price, but under the Australian Government 5% Deposit Scheme, some lenders can offer loans with as little as a 5% deposit. This is a government-backed guarantee that removes the need for Lenders Mortgage Insurance (LMI), which could save you thousands upfront.[1]
The larger the deposit you pay, the lower your mortgage payments and debt will be.
If you’re looking for more support options, you may be eligible for the First Home Super Saver Scheme [2] or the First Home Owner Grant (FHOG).
Loans and Pre-Approval
Once you’ve saved for your deposit and reached your target savings goal, you may want to speak to a mortgage broker, as they can offer a good understanding of the wider housing market. A mortgage broker can also act as a go-between when dealing with banks or other lenders when you apply for a home loan.
Getting a pre-approval on your home loan from your bank or approved financial institution is a good idea to ensure you know how much you can borrow before you start making offers on a property you like.
Be aware that pre-approval is not a guarantee that you will get the home loan, but it can give you more confidence when making an offer on the property.
When you apply for pre-approval, a lender will assess your application based on factors such as:
- Income and assets
- Job stability
- Spending habits
- Credit history
- Investments and shares
Having all your documentation ready when you apply for pre-approval will make for a smoother process. Be prepared by gathering all the paperwork you may need, such as your bank statements, pay slips, proof of identity and assets and liabilities.
Home loan pre-approvals are typically valid for three to six months, so you may want to hold off until you’re ready to make an offer. If you don’t secure a property within this timeframe, you can reapply with the same or a different lender.
But, be mindful to minimise the number of times you do this, as it can affect your credit score.
Additional Costs
While you save for your house deposit, there are additional expenses and upfront costs you should also budget for. What can often be overlooked during the home-buying journey is Home and Contents Insurance, which ultimately acts to protect your home against risks. To avoid any nasty surprises, make sure you also budget for additional expenses such as:
- Stamp duty
- Conveyancing and solicitor fees
- Disbursements or inquiries (for example, property title search fees)
- Building and pest inspection
- Local council rates
- Land tax (depending on your circumstances)
- Strata fees (if relevant)
- Home and contents insurance
A conveyancer or solicitor can guide you through the necessary steps and advise on any issues with the land or home. Some costs you pay, like building and pest inspections, can help you identify costly structural or internal issues and save you money and hassle in the future. Although this isn’t mandatory, it’s worth budgeting for to reduce serious issues later on.
Market Instability
One potential red flag for current home buyers is market instability. With fluctuations in the market and new data revealing the dwindling availability of homes under $500,000, [3] it’s understandable that this can cause you to have doubt and uncertainty. While searching in the market, it’s important to keep up-to-date with the current trends and speak to a trusted financial advisor about your unique situation.
Property Search
Once you start looking at properties, it’s easy to get excited and let emotion override your judgment. It’s important to check for any structural defects or cracks, factoring in both the property’s age and the overall quality of its construction. If you’re considering rebuilding, it’s important to keep in mind that renovations that don’t meet the Australian building standards may impact your home insurance.
Property Type
When searching for a new property, ask yourself a few questions about the type of home you’re looking for. With many different Australian house styles on the market, narrowing down the type of home you want can help with your search.
Investment Property
If you’re looking to purchase an investment property, consider what features might appeal to a potential tenant. Is the property close to schools, public transport, shops and restaurants? Do you need a garage or an extra bathroom to help attract tenants? There’s more to being a landlord than just owning a home. Once you have the property figured out, consider how you might also prepare and manage your property for your tenants over time.
Apartment or House?
The type of property you look at depends on your lifestyle, your price range, and how much space you need. An apartment is generally cheaper and requires less maintenance than a house, but there may be strata fees attached to these types of properties. If you’re leaning towards an apartment, it’s worth knowing the difference between strata and contents insurance to ensure your new property is fully covered from potential risks.
Off-The-Plan or an Existing Home?
With many new housing developments underway in Australia, it could also pay to purchase an off-the-plan property that hasn’t been built yet.
This can sometimes be more affordable than buying an existing home due to certain concessions and incentives available for off-the-plan purchases. In some cases, stamp duty costs may be reduced or waived, provided you fit the key criteria.[4]
There can also be the potential for custom variations and bespoke designs, which are more easily added in the building phase rather than after completion.
However, it’s essential to research the reputation of the builder/developer. Look for any red flags in their track record, like building delays or dodgy workmanship, and always consult with a conveyancing solicitor before signing any off-the-plan contracts.[5]
Location
Where a property is located can have a big impact on both your quality of life and its value. We suggest thinking about your work–life balance, nearby services, and the overall feel of the community. Visit the area a few times at different times of the day to check street noise, traffic and any major developments.
Researching a location also means understanding the potential risks. Properties in natural hazard areas, such as flood-prone or bushfire-prone zones or places that experience severe storms, may have fewer insurance options and higher premiums, which is important to note. Local crime rates can also affect what you may pay for your home and contents insurance.
It’s also worth researching pricing trends and capital growth rates, or trying a free tool like Boomscore, which provides insights on median property prices. Word of mouth and conversations with local real estate agents can also help you identify suitable areas for you and your family.
The Buying Process
You’ve found a place you love, now you want to lock it in! Whether you’re going through a private sale or gearing up for an auction, there are some important differences in the buying process.
Pre-Contract
Before a contract becomes unconditional, this is your opportunity to arrange a building and pest inspection. This will help you identify any issues that could affect a future insurance claim being denied or leading to insurability, preventing you from having out-of-pocket expenses. At this stage, gathering home insurance quotes can help you prepare for your settlement date and understand the potential costs.
Quote First with Budget Direct Home Insurance
Having Home Insurance from the day you settle offers protection for your new home.
Private Sale
Private sales are usually done through a real estate agent, where you can put in a request for a contract of sale.
It’s recommended that you get a solicitor to review the terms and conditions of the contract, and then you can prepare your written offer with special conditions.
These conditions will include the price you’re willing to pay, settlement date and terms, as well as other provisions like the length of the cooling-off period. In this timeframe, you can complete building and pest inspections and get your finances fully approved.
A cooling-off period also allows you to pull out of the contract if something goes wrong, for example, if the pest or building inspection results are unsatisfactory. During this time, you have grounds to withdraw from the sale, however, keep in mind this may lead to a termination penalty. [6]
Auction
If the home you’re looking to buy is going to auction, you can ask the seller’s agent how to make an offer. Usually, you can make a verbal or written offer, and if it’s accepted, the seller’s agent will formalise the letter into a contract of sale.
As with a private sale, it’s highly advised that you get a solicitor to review this document.
With an auction process, some of the stakes are higher compared to a private sale, so we recommend brushing up on your auction knowledge first. For one, there is no cooling-off period. If you are the highest bidder, you’ll need to settle the contract, regardless of whether or not:
- The house passes its inspections
- You change your mind
- Finances come through
Ensure you have done your due diligence before bidding on a property, and a conveyancer or solicitor will help you check all the boxes, including:
- Property valuation (make sure you conduct an independent valuation)
- Flood report
- Pest and building inspection
- Auction registration [7]
If your bid is successful, the deposit for the home will be due shortly after the auction.
Securing Home Insurance Before Settlement
It’s important to organise home insurance as early as possible, as your lender will require it, and it’s also the smartest way to protect your investment against any unfortunate events that may happen.
Before settlement, your lender will also usually require a certificate of currency. This is an official document from your insurer that shows your home insurance policy is active and includes key details such as the policyholder’s name, the property address, the sum insured amount and the period of coverage. You can get a copy by contacting your insurer.
When you’re securing home insurance, it’s best to keep in mind that most states and territories have different rules on when insurance becomes your responsibility, so it’s essential that you are not left uninsured for your new home.
During this process, check that your sum insured amount covers all your contents in case you need to replace them, as well as today’s costs to rebuild your home. It’s also worth considering any optional extras that may provide you with extended protection. Having an adequate sum insured amount and extra cover on your policy can help you avoid gaps in your coverage in case something goes wrong. However, we understand that it can be difficult and overwhelming to select an accurate figure. If you’re unsure, you can use our Home and Contents Replacement Calculator to help define these costs.
Are you looking for a certificate of currency before settlement?
If you’re looking to buy a home, then understanding what’s included in a certificate of currency and when you will need it is an essential part of the home-buying process.
Home and Contents Insurance
Protecting your new investment with Home and Contents Insurance is important from day one.
Before settlement, it’s essential that you not only take out home insurance, but also provide your lender with a certificate of currency. This important step will ensure your new home is safe and helps mitigate the potential risk for both you and your lender.
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