What is the homebuying process in Australia?

1. Deposit saving

Saving a deposit and the associated costs with buying property can be hard, so congratulations, even if you’re only part way there. The ‘golden number’ for a property deposit is 20 percent of the property value. 

Saving a 20 percent deposit will give you a strong start towards the ultimate goals of paying off your home, and it will save you from paying Lenders Mortgage Insurance (LMI). Yet, it’s possible to apply for a loan with as little as a 5 percent deposit. For more info, read about saving for a deposit. 

2. Search starting for a home

You’re probably well underway with the timeless challenge of searching your ideal locations for a place you’ll love to call home. 

One tip to keep your search energised is to chat to locals. It’s a great way to get inside info on local services and help you get a feel for the area. 

3. Bank selecting

The days of banking with the same financial institution for your whole life are long gone. It pays to shop around. You’re likely already onto comparing home loan interest rates as well as fees and charges. 

It’s also worth considering whether the values held by the bank align with your beliefs and priorities. Imagine if your home loan could make a difference to the world? Bank Australia’s clean money policies mean that, instead of investing in harmful industries like fossil fuels, we support renewable energy and community housing.

4. Conditional approval applying

Going through a conditional-approval process (or pre-approval) and using a home loan borrowing power calculator before you find a property can help focus your search thanks to knowing just how much you might be able to borrow. 

A conditional-approval process is an optional step in the home loan application process – its purpose being to assess the size of a loan you can comfortably take on. It’s usually valid for three months. 

5. Document gathering

An ideal step in the home buying process is to get your ‘document ducks’ lined up in a row ahead of being applying for a home loan or conditional approval.

To get prepared, gather proof of your income (salary and other things like dividends), proof of savings, your monthly expenses (yes, this is a great time to start keeping track of your budget), and details of other debts (loans, leases, credit cards and other finance). Try our living expenses calculator to help work out your figures.

6. Approval formalising

Once you’ve gathered and submitted all your documentation to your preferred bank, it’s time to wait for approval. It’s at this point that your property will be valued and the contract of sale is provided to the bank.

Bank Australia home loan approvals usually take a couple of weeks, with timelines subject to us verifying your financial position.

 7. Home buying

This is the exciting part! Celebrations are definitely in order when you progress from being a ‘first home searcher’ to ‘first home buyer’. You will have some back and forth at this stage with the lender and their legal people in the finalisation of your home loan contract.

Knowing you have the best home loan allows you to then turn your attention to plans for moving and settling in.

8. Settlement sorting

The second last step in the home buying process is settlement. This is the time between making a successful offer on a property and taking ownership. It can look like a quiet time from the outside but there is much to be done. 

Your solicitor or conveyancer will help you prepare for settlement day, which is the date on which the property title moves from the previous owner to you and all aspects of the sales contract are met. Your bank will then draw down on your loan and payments such as stamp duty are paid by you. Don’t forget to line up house and contents insurance to start on settlement day.

9. Repayment commencing

Your home loan repayments will start from the settlement date. Over the life of your home loan, your bank will keep you up-to-date about changes to interest rates and, as your personal situation evolves, you may be interested in options for loan pauses or making additional payments. 

Did you know that some Bank Australia loans allow a pause when you become a parent or choose to upgrade your home in an environmentally friendly way?

Keen to learn more? Explore the range of Bank Australia home loans or see how to apply for a home loan.