This information is general in nature only and does not constitute legal advice. While Budget Direct has endeavoured to ensure the information we’ve relied on is accurate and current, we do not guarantee it. Budget Direct accepts no liability for this information and recommends you obtain legal advice specific to your individual circumstances before entering into any contracts for the purchase of property or obtaining of finance.

Buying a home is a huge decision and a serious financial investment – and for most of us, it’s the most expensive purchase we’ll ever make.

There’s a lot to think about, so it helps to have a checklist, so you don’t forget anything important.

Here’s a handy guide to the things you’ll need to consider before buying a house in Australia.

Finance checks

The first step in buying a house is to save up the deposit. 

This is normally 20% of the total purchase price, but there are advantages in making your deposit a higher percentage: you’ll have lower mortgage repayments or alternatively the extra you save could help you afford a better property.

The home loan business in Australia is very competitive, so it pays to shop around. 

Making the right home loan choice can save you thousands of dollars over the life of your loan, so its important to get it right. 

Each home loan has its own sets of terms and conditions, so ask enough questions to fully understand the details of your mortgage. Is there a redraw facility? Can you pay out your loan early by making extra payments? 

It might take 2-5 years to save up a deposit to buy your house, so starting as early as possible will put you in a better position. 

The deposit is only the start of your upfront expenses. In addition, estimate an extra 5% of the total purchase price to cover other costs, including:

  • Conveyancing or solicitor fees
  • Disbursements or inquiries (title searches, etc.)
  • Pest and property inspections
  • Identification survey
  • Strata records inspection (if relevant)
  • Stamp duty on transfer of title / on mortgage
  • Lender’s application fee
  • Valuation fee
  • Mortgage insurance (if required)
  • Adjustment of council rates
  • Home and Contents insurance
  • Other expenses might include changing the locks, carpet cleaning, removalist fees, connection fees for various services and costs associated with any urgently needed repairs.

Location checks

The neighbourhood you choose to live in will make a big different to how happy you are in your home. Ask yourself - 

  • What are the local property values like?
  • What are the burglary rates in that part of town?
  • How close are the nearest shops, hospitals, restaurants, train stations or bus stops?
  • Have you checked with the local council about any big developments planned for the area?

Even though a house looks like it’s on ‘a quiet street’, it doesn’t hurt to check out what kind of neighbours you might be letting yourself in for.

Location checks

Flooding and poor drainage can be another problem. A house on a slight slope and with a bit of elevation might be worth paying more for in some parts of town.  

Most local councils have flood maps available on their websites that can help provide you with the area’s flood history.

It helps to know if property prices are rising or falling in the area, so check pricing trends with the Real Estate Institute of Australia. 

Other considerations – 

  • New road construction or the proximity of factories, jails or sewerage works are obvious negative factors that you need to know about beforehand. 
  • Are there are sportsgrounds, bars, train stations or other noise sources nearby?
  • Does the house have a good view, access to a nice breeze in summer, some nearby parks or walking tracks, handy recreational facilities or a well-kept garden?

School for kids

If you have children, distance to decent schools is also an important consideration.

Ask yourself – 

  • How close are they and how will your children get there and back?
  • Is public transport readily available?
  • Is there a train station or bus stop nearby?
  • If children are walking to and from school, is the route safe? 

It’s worth doing some research into available schools within a reasonable distance of your new home. 

Public transport

Only about 1 in 10 of Australians regularly use public transport to get to and from work.  but having buses and trains available near a new home can be useful.

With trains, the ideal is a station that’s close enough to conveniently walk to, but not so close that your house is subject to endless train noise.

For others, walking from home to a train station or bus stop is a less stressful way to commute than sitting in traffic in their own car.

A title search provides a potential house buyer with an official record of a property’s ownership history.

It ensures the seller has the legal right to sell the property and that no liens or encumbrances exist that might prevent you from purchasing the property.

Each state and territory have its own requirements and methods regarding title searches, so check what is required where you live. Your conveyancer can advise you about title checks.

Long-term investment

Because of the current housing shortage in Australia, real estate can represent a good investment. 

If you are buying a house with the idea of renting it out, you may be able to generate a reliable income stream or create tax savings through negative gearing.  

Checking out the tax treatment that will apply to you and your property is a ‘must’ step in your pre-purchase research.

Long term investment

However, if you are looking at an investment property you need to know what you’re doing. Ongoing maintenance costs, bad tenants and other issues can consume your time and money, so you need to make the same sensible decisions in purchasing an investment property as you do when selecting a house to live in.

Having a competent, professional property manager to deal with the month-to-month details and a qualified accountant is also an important consideration. 

You can purchase specific insurance cover to help protect your investment against incidents such as malicious damage or rent default. 

Home and Contents Insurance

Being underinsured can come back to bite you if your home is affected by- 

  1. Storm damage
  2. A bushfire
  3. A leaky pipe that floods the house,
  4. Burglary 
  5. Vandalism 
  6. or some other unforeseen calamity.

23% of households have no home and contents insurance , which is astounding when you consider that the average value of household contents in Aussie homes exceeds $60,000. 

Before you purchase home insurance, read the Product Disclosure Statement and Key Fact Sheet and make sure you understand what your policy covers. 

Learn more about home insurance and coverage options

Building inspection

Before you buy a house, have a thorough building inspection performed by a licensed and insured professional. 

Keep in mind that a building inspection report is different from a pest inspection report (although some companies can perform both for you). 

A building inspection will cost you a few hundred dollars but is worth its weight in gold. Here’s why:

Structural soundness

The last thing you want is to be buying a house with major structural issues. Aside from the safety risk to those living in the house, you could be up for huge repair bills. 

An inspector will look at the building’s structural integrity and check for rising damp, sagging walls, faulty roofing, water damage, etc.

Identifying safety issues

We all want a safe home, and an inspection will look for any obvious safety issues including the presence of asbestos, cracks in walls, loose balustrades and anything else that might pose a hazard to the occupants.

Budgeting for repairs

Real estate people love the term ‘fixer-upper’, but how much are all those repairs going to cost you?

Budgeting for repairs

A proper inspection can help you determine what’s needed in the way of future repairs or replacements so you can better estimate the total cost.

Sheds, patios and other structures

Building inspectors also check things like garden sheds, pergolas and patios. If the previous owner built these without proper council approval, they might need to be torn down.

Price negotiations

If the inspection shows you’ll need to perform considerable repairs, you may be able to negotiate a lower price for the property.

You should always make your own personal inspection of a property. 

Key things to look out for include:

  • Damp or mould
  • New-looking patches of paint that may have been used to cover up a defect
  • Windows and doors shutting/opening correctly 
  • Toilet flushing properly
  • Laundry and kitchen taps

Pest control inspections

In addition to a professional building inspection, you should also have your prospective new home inspected for pests. 

Use a licensed pest control company. While there are some obvious signs of termite activity that you might be able to spot yourself (termite nests in trees near the house, blistering or bulging paint, rotten and half-eaten fence posts), the only way to be sure is with a professional inspection. 

A pest control inspector will look for other pest issues too: ants, wasps, mice, spiders, clothes moths, cockroaches, etc. These are the sorts of things you want to know about before you buy a house.

Appliances check

One thing that home buyers might forget to check is whether the home’s built-in appliances work properly. 

This includes -

  • Hot water system
  • Stovetop
  • Oven, 
  • Air conditioning
  • Central heating system.  

Just because a house ‘comes with’ certain appliances, doesn’t mean they all work correctly. 

If the house is equipped with an alarm system, ceiling fans, an intercom system or electric garage doors, you should know whether these are functional before you buy the house.

If you want to be even better prepared for buying your first home, here are ‘4 red flags’ you should look out for.