Thinking of buying a home? Here’s what you should know

Guide to buying a house

Where do I start when buying property? What are the costs of buying a house?

Buying property is probably one of the biggest financial decisions you’ll make in your lifetime. As such, it requires a large amount of consideration. It doesn’t matter if you’re buying a six bedroom house on Wolseley Road – or a studio apartment in Tuggeranong, buying property is a very big deal.

Where to start? As a first step, it’s a good idea to work out what your budget is – based on your deposit and how much you can borrow. Luckily, UNO has a borrowing power calculator that helps you work out how much you’re working with. We also have a section which details everything you need to know about your borrowing power so be sure to check that out too. 

Securing pre-approval for your expected maximum loan amount will then help you negotiate the best purchase price when it comes time to buy. Once you know your budget, you can begin that exciting home search.

Explore my options

Steps to buying a home:

• Step 1: Budget
• Step 2: Apply for a home loan & get pre-approval
• Step 3: Find a home
• Step 4: Bid with confidence
• Step 5: Celebrate and settle

Related topics

• 5 Steps to buying property
• Everything you need to know about finding the right home for you
• Want to know the costs involved in buying and selling a home?
• Bidding at Auction

How much money do I need for a house deposit?

There is no magic number when it comes to a deposit, however in Australia the majority of lenders require you to have saved 10% of the property’s value (a couple of lenders may only require 5%).

How do I calculate a deposit?

This means if you’re looking to buy a residential property with a value of $800,000, you’ll need a deposit somewhere between $40,000 (5% of $800,000) and $80,000 (10%).

Ask a lender what to know when buying a house and they will likely tell you about a general rule of thumb; the smaller your deposit, the more rigid the regulations are on it. If you only have a 5% deposit, be aware that this needs to comprise “genuine” savings – i.e. it’s not dependent on your brother selling his car, or a loan from a friend. These are the things that make lenders nervous. Your deposit will affect how much you are able to borrow from your lender. Please keep in mind that money from a parent or third party is known as a gift and not considered genuine savings.

If you’ve only got a 5% deposit it has to be genuine savings. if you’ve got 10% or more, a gift (from a parent, for example) can be part of it.

If you’re buying an investment property, lenders tend to be more rigid, with most requiring a deposit of at least 10% of the property’s value.

A UNO broker can help you work out what you can purchase with the deposit and income you have, use the booking icon below to book in a call at a time that suits you

How much deposit do I need as a first home buyer?

Whether you are buying your first home or your sixth property – and using equity from your previous homes to do so – the rules are still the same. You’ll need at least 5% (and 10% for investors) of the value of the home to put down as a deposit. The same rules apply if you bought a home back in ‘82 and sold it in ‘95, and want to buy a new property in 2022. Just because you’ve done it once, doesn’t mean you get a special deposit discount the second time round.

How do I buy property with no money down?

If you haven’t saved a deposit but want to buy property, and don’t have a sugar mummy, all is not lost. You’ll need to qualify for what’s known as a guarantor loan. A guarantor is usually a family member who is legally responsible for paying back the entire loan if you cannot – or will not (I will not, I say!) – make the loan repayments.

The guarantor will also have to pay any fees, charges and interest. If you have a direct family member who can act as guarantor and use their property as guarantee, you may be eligible for a guarantor loan. Read more about guarantor loans and how to get a loan with no deposit here. 

Can I get a home loan with a 5% deposit?

These days, it’s recommended home buyers save as much as 20% of the home’s value to put towards a deposit. But when you look at the, raising a 20% home loan deposit makes it challenging for first-time buyers to enter the property market – particularly given the cost of buying a house in our capital cities. The good news though, is that under some circumstances you may be able to secure a mortgage with as little as a 5% deposit. You’ll need to meet eligibility criteria and you’ll have to look ‘safe’ on paper to offset the increased risk your high loan-to-value ratio (LVR) presents.

Typically you’ll need:

• A clean credit history – on-time repayments on existing debts over at least the last six months
• A strong asset position – the lender will determine the strength of your assets based on your age and income
• Stable employment – you will typically need at least six months in your current job, although some exceptions may apply
• Low personal debt – this figure should not amount to more than five per cent of the value of your property
• Some genuine savings – this should amount to at least five per cent of the property’s value to make up the shortfall of the loan, and cover the expenses associated with buying a property

What costs are involved in buying a house in NSW?

The costs involved in buying a home differ from state-to-state across Australia, not only because of the variance in house prices but due to things like stamp duty and legal costs – which tend to be higher in metropolitan cities.

How much is stamp duty on a house in NSW?

Using UNO’s stamp duty calculator, we can see that the stamp duty on a $32 million house in Wolseley Road, NSW is $2,180,768; whereas on a $322,000 studio apartment in Tuggeranong, ACT it is $6,548.

As well as the stamp duty fee itself, you’ll have to pay a transfer fee and a mortgage registration fee. The transfer fee is usually around $200-$300 and the mortgage registration fee around $100-$150.

Before you exchange contracts with the seller, you’ll want to hire a conveyancer. The legal work involved in preparing the contract of sale for a property (if you’re selling), reading it thoroughly and making any changes (if you’re buying), home loan documents and other related docs, is called conveyancing. Costs will differ depending on who you use, but you can expect to pay anywhere from $600 to $1500.

How can I invest with no money?

When it comes to buying an investment property, most lenders will want to see a deposit that equates to around 10% of the property’s value and will expect you to have saved a chunk of this yourself (as opposed to someone just gifting it to you). The only way to get a loan without much in the way of deposit yourself is through the use of a loan structure known as a Family Pledge. In short, these loans enable a family member (typically a parent) to allow the equity in their property to be used as the deposit for yours. They can be very effective but of course come with some nuances and considerations for you and the family member. If this is an option for you best to line up a call with uno so we can step through the specifics of your situation.

Looking for more?

Read: Steps to buying a property, which outlines everything you need to know from the heated search to the cooling off period.