Australia is a great place to invest your hard-earned money. Read on to discover the steps to buying a house in Australia here.
Buying land from down under is a process that depends on your reasons for purchase. You may be an oversea investor, or an Australian ex-pat looking for a promising investment opportunity. You may just be looking for a house.
Whatever the reason, if you’re buying a house in Australia, you need to know what you’re signing. Read on to discover how buying a house in Australia can be a simple, painless process.
Why Are Investors Looking for Property in Australia?
The reasons for investing in Australia abound. For starters, you don’t have to be a citizen to apply for a home loan. Investors are also attracted to Australia’s stability. Much of this stability is due to Australia’s high percentage of homeowners.
The more homeowners a community has, the less risk there is because renters are more likely to default on a loan than homeowners.
With a consistent undersupply of homes in capital cities, the demand remains at peak levels and should continue that way.
The demand for homes in capitals combined with responsible lending laws minimizes the risk of price bubbles. It also helps that Australia’s Prudential Regulation Authority makes calculated investments regularly.
Australia simply doesn’t see the same market crashes America sees. During its peak, the American housing crash of 2008 took an average of 100,000 per household. Australia doesn’t have the same speculation issues as the US.
Since the majority of Australia’s housing market is owner-occupied, the market doesn’t experience as many fluctuations. All of these are reasons for the average person to look into the great real estate Australia offers.
The Australian home-buying process is a multi-step process that requires budgeting, organizing a team of professionals, applying for a loan, and negotiating the price. But there are a few steps within those steps to discuss as well.
Understand your budget, and you’re one step closer to buying a home in Australia. You may have a place in mind, but until you speak with a real estate agent who can offer some advice, you won’t know whether your dream home fits within your budget.
You might have a location in mind, but speaking to a real estate agent offers good directions to help you select the right home for your needs.
Just like anywhere else, if you can’t prove you can afford the debt, you won’t be able to find an approval.
Seek Professional Help
Closing on a property requires a lot of legal work, so you’ll need a conveyancer or a solicitor to help. These professionals research properties and manage the transfer of ownership documents.
You also need a mortgage broker to make sure you’re receiving a fair deal. These professionals make applying easier and consult you the whole way through.
Accountants are sometimes needed if you’re concerned about how to move finances. But they are not always necessary.
Getting a loan-approval ensures that you can immediately put an offer on a place you like. Instead of looking for properties, then seeking approval, get approval first, then get serious about looking at properties.
Pre-approval also provides insight into your eligibility for loans, so you’re not constantly second-guessing how much your approval number. You can seek pre-qualification from banks such as Ubank and BOQ Home Loans.
Apply for the Mortgage
Once you settle on a house and you’re ready to make an offer, it’s time to get down to the brass tacks. Lending criteria is complex, and it can be challenging for non-residents.
It’s essential to have a knowledgable mortgage broker at your side throughout the process. Mortgage brokers know what institutions lend to who. They also know what the borrower needs to provide the lender.
Foreign Investors’ Review Board
If you don’t live in Australia, or you have a temporary visa, after you apply for the loan, you’ll have to get permission from the FIRB. Australian permanent citizens, and Nez Zealand citizens do not need the FIRB’s permission.
But don’t fret, getting FIRB approval is a painless process that takes at most, a month.
Applying for FIRB approval isn’t necessary until you’ve found a property. But you should start examining their policies so you know you’re buying an eligible property.
Negotiate the Price
As your mortgage is getting approval, you’ll want your mortgage broker to start negotiating with the seller’s broker. As a rule of thumb, Australian properties sell for a percentage lower than their asking prices.
Lower sales are not without exception because some markets are more inflexible than others. For example, properties in the suburbs tend to sell more than asking price.
Each Australian state has specific property laws that your solicitor will understand and explain to you. Cooling-off periods- a process that allows you to place a holding deposit on your desired place- is highly beneficial for the buyer.
Checks and Inspections
After you put a holding deposit down, your mortgage broker will let you know what checks and inspections the home needs. These inspections make sure the home is in good standing, and no repairs or issues exist.
Final Mortgage Approval
Your mortgage broker will proceed with formal approval once they have all of the necessary checks and inspections. You should never fully commit to buying a property before your mortgage is formally approved.
Sign Contracts and Pay Your Deposit
Once you are formally approved for your mortgage, your broker can explain the contracts. Australian homes usually require a 10% down payment, but that amount is negotiable.
It’s essential to understand that once you commit to a party, you’re under contract. Make sure you know every facet of the agreement before you sign it.
Because of the level of commitment home buying contracts have, it’s wise to have an attorney look through them. But most arrangements are straightforward, so it’s up to you to decide.
If you accept the loan offer, you sign the corresponding sections and turn the loan applications into the bank. Before you sign, conduct a final walkthrough of the property on the day of your settlement. Your buyer’s agent can do this walkthrough if you have one.
The settlement stage is when the property exchanges hands. Your loan is then advanced, and you’re responsible for your new home. Your Conveyancer or solicitor will consult with your bank, so you don’t have much responsibility in this stage.
You’ve already completed most of your work! The lender keeps your title, and the keys are available for pickup from the real estate agent. If the property is intended for rent purposes, the property manager can start advertising to fill the property.
Buying a House In Australia Today!
Buying a house in Australia is all about surrounding yourself with the right people to make the process easier. A real estate agent, conveyancer, and mortgage broker can walk you through buying a house, so you come out feeling excited and fulfilled.
Real estate isn’t the only way to feel fulfilled. Travelling can do the trick as well! Check out more of our blogs for useful traveling tips!