How to buy a house in Australia, step by step

The short answer

Work out your borrowing capacity and your total costs, get a pre-approval, find a property, make an offer with a finance clause, then let the lender value the property and issue formal approval. Settlement follows once both sides are ready.

The finance runs alongside the property search rather than after it. Every step below assumes the money question is being worked on at the same time as the house question.

Step one: work out what you can actually spend

Your budget is not what you think you could afford each month. It is what a lender will advance you after it applies its own income rules, its own expense benchmark and an assessment rate above the one you would pay.

Two numbers matter here and they are not the same. The first is how much a lender would lend you. The second is how much cash you need in hand on the day, which is the deposit plus the costs.

The three figures to establish first

• Your borrowing capacity, which is set by income, commitments and the lender's assessment rate
• Your available deposit, and where it came from, because lenders ask about both
• The purchase costs on top of the price, which are covered further down this page

A calculator will get you a working figure in a few minutes. A broker running your position against several lenders' policies will get you a truer one, and it costs you nothing and no credit enquiry.

Step two: get the finance assessed before you get serious

A pre-approval is a lender saying in writing what it would be prepared to lend, before you have found anything. It changes how you shop, and it changes how agents treat you.

It is not the loan and it is not a guarantee. It is conditional on a valuation, on final credit assessment and on your circumstances staying broadly as they were.

• Identification for every applicant
• Recent payslips, or two years of returns and financials if you are self-employed
• Bank statements for your everyday and savings accounts
• Statements for every credit card, personal loan, car loan and buy-now-pay-later account
• Evidence of your deposit, including a gift letter if part of it was given to you

Choose the lender before you apply rather than after. Every application is recorded on your credit file, and a run of them in a short window is a pattern assessors read badly.

Step three: finding the property, and what to check before you offer

Property choice is not purely a lifestyle question, because lenders have views about security. Some properties are harder to finance than others, and finding that out after your offer is accepted is an unpleasant surprise.

• Small apartments, studios and serviced apartments, which several lenders restrict or decline
• Rural and lifestyle blocks, where land size and zoning affect what can be lent
• Properties with structural problems, unapproved work or an unusual title
• Strata schemes, where the levies and the sinking fund are part of the cost of owning it
• The building and pest inspection, which is cheap relative to what it can find

Ask your broker about the property type before you fall in love with it. It takes one conversation, and it is the cheapest question you will ask all year.

Step four: making the offer

In Western Australia the selling agent usually prepares the contract once you and the seller agree on a price and terms. What goes into it matters as much as the number.

The conditions are your protection. A finance clause, an inspection condition and a realistic settlement date are the three that do the most work.

Step five: from accepted offer to unconditional

This is where the file gets busy. The lender now has a specific property to assess, and several things happen at once.

1. 1

   The lender orders a valuation

   It is valuing its security, not confirming that you paid a fair price. A valuation under the contract price means the lender advances less, and the gap comes out of your cash.

2. 2

   Formal approval is issued

   The assessor reviews the file against the property and issues an unconditional approval, or comes back with conditions to satisfy first.

3. 3

   Your conditions are satisfied

   Finance, inspections and anything else in the contract are signed off inside the dates written into it. Missing a date is a contractual problem, not an administrative one.

4. 4

   Loan documents are issued and returned

   Read them, sign them, return them. Nothing moves until the lender has them back and is satisfied with them.

Keep your position still while all of this happens. A new car loan, a job change or a large unexplained transfer can send a file back to the assessor, and there is no upside to finding that out in the last week.

Step six: settlement, and the days around it

Settlement is the moment the money moves and the title transfers. It is run by your settlement agent or conveyancer, working with the lender and the seller's representative.

• Your settlement agent prepares the transfer documents and calculates the adjustments
• Rates, water and strata levies are apportioned between you and the seller to the day
• Your lender releases the loan funds and takes its mortgage over the title
• You do a final inspection shortly before settlement to confirm the property is as agreed
• Keys are released once settlement is confirmed, usually through the agent

Have your funds available and cleared well before the day. Money in an account that has not cleared is money you do not have yet.

What it costs on top of the purchase price

The price is not the cost. The extras are large enough to change which property you can buy, and they are the thing first-time buyers most often underestimate.

• Transfer duty, which in Western Australia is assessed by RevenueWA on the property value
• Settlement agent or conveyancer fees, and the government registration fees they pay on your behalf
• Lender application, valuation and settlement fees, where the lender charges them
• Lenders mortgage insurance, if your deposit sits below the lender's threshold
• Building and pest inspections, and a strata report where one applies
• Council rates and water adjustments at settlement, plus connections and moving costs

Work the whole number out before you set a price ceiling, not after. Our stamp duty calculator will give you the duty figure on a WA purchase in about a minute.

Where to go next on this site

Each step above has a page behind it. Work down this list roughly in order and you will have covered the whole purchase.

If this is your first purchase, there is more help available than most people realise, and it is set out on its own page rather than buried in this one.