Home Buying

Home buying checklist: what to look for when buying a house

Toni Mladenova
Aug 20, 2021
Yard Financial Pty Ltd | ACN 623 357 513 | Australian Credit Licence 509481

Table of Contents

Buying a new home and feeling overwhelmed by it all?

As the biggest financial commitment of your life, you need to understand the entire home buying process so you know what to expect and can make an informed decision. 

Our home buying checklist takes you through the entire process, from all the costs involved, to researching and narrowing your shortlist of suitable properties, to all the items you need to check or have inspected to prevent anything becoming an issue.

This checklist starts with a crucial first step: understanding all the costs involved. 

1. Understand all the costs involved

Step one in our home buying checklist is to understand all the costs involved, a crucial step as it will determine what property you can afford. 

Key elements of this include budgeting for a deposit, stamp duty, legal and conveyancing fees, as well as finance and insurance costs. This together with the price of the property will determine not only the area you live in, but also if you can afford a house, townhouse or apartment.  

You can estimate how much you need to borrow based on the area and type of property you are looking to purchase. Our borrowing capacity calculator will help you estimate your home loan borrowing capacity, the value of the home you can afford (assuming you are buying with a 20% deposit) and your monthly repayment. 

The next step is to identify the right home loan for you.

Learn more: First home buyers guide

2. Research and apply for a home loan

Step two is to research home loans. You need to understand the terms and conditions of the loan, specifically:

  • The interest rate and how it is calculated.
  • The difference between fixed, split and variable rate loans.
  • The term or length of the loan, which typically ranges from 10 years to 30 years.
  • Specific features of the loan, like additional repayments, redraw and an offset facility.
  • Any conditions attached to the loan.

Lenders take a number of factors into account before they will approve your home loan. 

They need to work out if you can afford to pay - or service, your monthly home loan repayments. Your serviceability is based on your monthly expenses/outgoings/debts which is subtracted from all your monthly income. 

To qualify for a home loan you also need to have the required deposit, meet the LVR (loan to value ratio) threshold and be able to service the loan. Your LVR is calculated by dividing the amount of your home loan by the purchase price or appraised value of the property. You can take your budgeting a step further by using our mortgage repayment calculator to estimate your potential loan repayments on a new home loan

Your lender can then give you pre-approval or approval in principle, so you know in advance what budget you have to work with.

Tip: Yard can provide loans for up to 80% of a property’s value without Lenders Mortgage Insurance. For example, if a property has a value of $1 million, we may lend you up to $800,000. Yard can lend up to 95% of the property’s value with Lenders Mortgage Insurance.

The next step is to identify a suburb or neighbourhood that matches your budget and lifestyle needs.

Learn more: Bank versus non-bank lender loans

3. Location, location, location

Step three is all about locating a property in a location that meets the needs of your lifestyle and family. 

Points to consider include the amenities the local neighbourhood has to offer - such as shops, schools, green space and proximity to public transport. Assuming you can afford properties in an area you should also research the quality of local schools, school catchment areas, noise levels and crime rates in the suburb. 

Once you have identified a suitable suburb or area you can now narrow your search to individual properties in your price range.

4. Start your search

Step four is to begin the search for your property. 

Start by asking yourself what type of property you want - a unit, townhouse or house - and what features it needs to have. This could be things like the number of rooms, the size of individual rooms and backyard, and what orientation (direction) the home faces. Use online listing platforms like realestate.com.au or Domain to research suburbs and identify properties that meet your criteria. Both have powerful filters which allow you to specify location, price and the number of bedrooms.

You should also talk to real estate agents, go to in-person property inspections and explore first-hand what's on offer. Be aware this step could take months, so you need to work this into your overall time frame.

Once you have a shortlist you can begin to view properties in-person. 

5. Is this home right for me?

Step five is to walk through all the properties on your shortlist and decide if they meet your criteria. 

This is your chance to go beyond the photographs and floorplans in the listings, and get a real feel for the home’s features. Does it have the right number and configuration of rooms to suit your needs? Does the property have good natural light? Are there any planned developments nearby? Is the garden a decent size? Is there on-site parking? Will you need to budget for any renovations?

You also should look for any obvious visual signs the property has problems, like rising damp or new-looking patches of paint that may have been used to cover up a defect. You can also test items as you walk through, that windows and doors shut/open correctly, toilets flush properly, and all taps are working. It is also worth identifying if the property is in a flood-risk area or bushfire zone.

If you are serious about making an offer for the property, you should now get a professional to evaluate it for you.

6. Getting a professional inspection

Step six is to get a building and pest inspection done by a professional. 

A qualified building inspector will look for any potential structural defects, electrical safety and plumbing issues and more. A separate pest inspection will put your mind at rest that there is no damage from termite activity or other pest issues. If you are buying into a strata building you should also get a strata search done to assess the status of the owners corporation’s finances. 

When you are satisfied that the property is sound you are ready to make an offer. 

7. Make an offer and negotiate a sale price

Step seven is to make an offer and negotiate a price with the seller or their representative. 

You can do your own negotiations but most people choose to use the services of a professional, like a solicitor, conveyancer or buyer’s agent. The advantage of this is that they are familiar with the sale process and all the legal documentation required. This includes reviewing the contract of sale contract, which details everything about the property, including the price and what the sale includes. 

If the seller accepts your offer you will have to pay a deposit - typically 10 per cent - to secure the property. If you are buying at auction you will need to understand how house auctions work

You will now move to the final stage of the home buying process, where you exchange contracts and move to settlement.

8. Exchange contracts and settlement

Step eight is to exchange contracts of sale. You then go through a settlement period - anywhere from 4 - 6 weeks depending where you live. On settlement day you exchange all the relevant sale documents with the seller, and you also pay the balance of the sale price. Your name is now registered on the title of the new property, and you are a homeowner!  

Armed with this knowledge you should know what to expect from the home buying process, and be prepared for every step.

Have any questions about the home buying process? We’re here to help, and our friendly local team are available to chat at a time that suits you.

Want to learn more?