Buying a new home

11 steps to turn your home buying dream into reality

Step 1: Determine your budget

Setting a budget is the first and most crucial step you must do before ever considering purchasing a house. This step requires some self-reflection; you need to take a good, long look at yourself and your financial situation to figure out what you're planning for the future and how much you can afford to pay back.

Step 2: Know how much you can borrow

How much you can borrow, and the costs associated with buying a home will vary from lender to lender. An affordability calculator gives a very conservative estimate of the amount you will be able to borrow. The biggest upfront cost is the deposit, but you will also need to prepare for other fees. A great savings goal for a house deposit is 20% of the purchase price, plus enough to cover buying costs.

Everyone's situation is different. How much you can afford to borrow depends on your:

• income and financial commitments

• house deposit, plus any other savings

• credit score and credit report

Step 3: Shop around for deals in the market

Be proactive and contact lenders directly about deals on offer. You can also rely on your mortgage brokers to look around for deals. The more you know about the current home-loan market, the better your negotiation skills will be when it comes to asking your lender for more features.

Step 4: Choose a home loan

Borrowers need to familiarise themselves with the different types of interest rates on these loans as well as the product features that can help them. Choosing between fixed and variable rates will affect how much you will pay monthly and for the rest of your home loan term.

Step 5: Get loan approval

Once you've found the perfect property for you, it's time to apply for a home loan. Make sure you have all the necessary documents ready for your lender or broker. Loan approvals don't last forever - they typically are valid for around 6-12 months.

Step 6: Find your home

Once you know your budget, it's time to determine how much 'home' it's likely to buy you. The real estate section in newspapers and real estate agents are useful sources of pricing information. Online Home Price Guides are a good place to start when looking for price estimates.

Step 7: Conduct a home inspection

Conducting building inspections is one of the most crucial steps in buying a home. It is vital that you find out about any hidden nasties like damp, shifting foundations, faulty wiring, and plumbing. Some of the common things to check include damp problems, wall cracks, and pest activity.

Step 8: Make an offer

After inspecting the property, it's time to make a private sale offer. It's usually wise to make an offer within 5% of the asking price. The most common tactic is a verbal offer to the seller's real estate agent. A sales summary can be prepared by your solicitor for the vendor. Borrowers must understand the terms and conditions of sale before they enter into a contract.

Your bid is binding, so make sure you really want the property before you raise your hand. Don't exceed your maximum spending limit.

Step 9: Do the legal work

Once you've found the property, you need to arrange conveyancing. Conveyancing is the transfer of property title from one person to another.

Step 10: Check for government grants

During this time, you can also check for government grants that can take some of the costs off your back. There are a lot of grants and schemes available in each state and territory. These grants can potentially save you thousands of dollars which you can set aside for other purposes.

Step 11: Wait for Settlement

Settlement day is the day you or your representative meet with the vendor to swap your cheque with their title of ownership. With most people this certificate will quickly go to your lender, unless you are lucky enough to purchase the property outright. The building must be insured at the time of settlement otherwise lenders won't lend you money.

Stamp duty

Stamp duty is a one-off state government property-transfer tax. You typically need to pay this within 30 days of settlement.

Find out how much you have to pay by using one of these calculators:

• Australian Capital Territory — Revenue Office: Conveyance duty calculator

• New South Wales — Revenue NSW: Calculator — for land and property transfers

• Northern Territory — Department of Treasury and Finance: Stamp duty calculators

• Queensland — Office of State Revenue: Transfer duty calculator

• South Australia — RevenueSA calculator: Stamp duty on conveyances

• Tasmania — State Revenue Office of Tasmania: Property transfer duty calculato

• Victoria — State Revenue Office: Land transfer (stamp) duty calculator

• Western Australia — Office of State Revenue: Calculators

If you're a first home buyer, check if you're exempt from stamp duty or entitled to a rebate or concession.

Have more questions? Get in touch to discuss your options.