Understanding the basics of the home buying process

The Australian home buying process runs through several formal stages, each with its own requirements and timelines.

Most buyers submit their home loan application within the first two weeks of starting their property search. Knowing what happens at each stage, and what documents you need along the way, keeps the process moving without delays.

Getting pre-approval before you start looking

Pre-approval confirms how much you can borrow before you make an offer. Lenders assess your income, expenses, existing debts and credit history, then issue conditional approval valid for 90 to 120 days depending on the lender. Some lenders refresh pre-approvals without a full reapplication if your circumstances have not changed.

Consider a buyer earning $95,000 per year with no dependants and monthly expenses of around $2,800. At current variable rates, serviceability is assessed at the product rate plus a 3.0 percentage point buffer under APRA policy. Their approved loan amount sits between $500,000 and $550,000, depending on the lender's assessment method and any existing debt. That buyer can then search within that range without wasting time on properties they cannot finance.

Pre-approval does not lock in a rate unless you apply for a formal rate lock at the time you exchange contracts. Most lenders offer rate locks for 90 days once contracts are exchanged, though terms vary.

Exchanging contracts and paying your deposit

Once your offer is accepted, you exchange contracts. The cooling-off period in most states runs for five business days from the date of exchange, though this does not apply if you purchase at auction. In NSW, Victoria, Queensland and South Australia, you can withdraw during the cooling-off period but may forfeit a percentage of the deposit, typically 0.25 per cent of the purchase price.

The initial deposit is usually 10 per cent of the purchase price and is paid to the selling agent's trust account or a solicitor's trust account at exchange. If you are using the Australian Government 5% Deposit Scheme, you pay 5 per cent and the government guarantee covers the gap to 20 per cent, removing the need for lenders mortgage insurance. Settlement periods range from 30 to 90 days depending on what is agreed in the contract.

Your solicitor or conveyancer conducts title searches, checks for easements or encumbrances, and reviews the contract of sale. They also confirm zoning, which is relevant if you plan to add a secondary dwelling or use home equity to build a granny flat after settlement.

Applying for formal loan approval

Formal approval happens after contracts are exchanged. You submit a full application with the signed contract of sale, a property valuation ordered by the lender, proof of deposit, payslips, tax returns if you are self-employed, and bank statements covering the previous three months.

Lenders assess the property valuation alongside the purchase price. If the valuation comes in below the contract price, the lender bases the loan amount on the lower figure. A property purchased for $680,000 that values at $660,000 results in a loan offer calculated on $660,000, leaving the buyer to cover the $20,000 shortfall in cash or renegotiate the price.

Most lenders issue formal approval within five to ten business days if all documents are in order. Conditional approval at this stage may require you to satisfy additional requirements such as insurance or final employment verification before settlement.

Organising settlement and final inspections

Settlement is the day ownership transfers and the balance of funds is paid. Your solicitor confirms the settlement date with the vendor's solicitor and arranges for your lender to transfer funds electronically on that day. You conduct a final inspection within seven days of settlement to confirm the property is in the same condition as when you exchanged contracts and that any agreed repairs have been completed.

On the settlement date, the lender releases the loan funds to your solicitor, who then pays the vendor. Stamp duty, conveyancing fees, and any adjustments for rates or water usage are also settled. Once the transfer is registered with the relevant state or territory land titles office, you receive the keys and formal ownership.

In some states, registration can take several weeks after settlement, but you take possession on settlement day. Your solicitor will confirm registration once the title is updated.

What you pay at each stage

Application fees vary by lender and product but typically sit between $0 and $600. Valuation fees range from $200 to $400 depending on property type and location. Conveyancing or solicitor fees range from $1,200 to $2,500 depending on the complexity of the transaction. Building and pest inspections cost between $400 and $800 combined. Stamp duty varies by state, property value and whether you qualify for a concession or exemption. Lenders mortgage insurance applies if your deposit is below 20 per cent and is calculated on a sliding scale based on the loan amount and loan-to-value ratio.

If you are refinancing an existing loan to fund a construction project, such as refinancing to fund a granny flat, discharge fees from your current lender may apply, usually between $150 and $400.

Call one of our team or book an appointment at a time that works for you. We can walk through your specific situation, confirm your borrowing capacity, and structure your application to move through each stage without unnecessary delays.

Frequently Asked Questions