Owning a house in Australia

SGtoAU

Hi, sana po ma share nyo experience nyo in purchasing a home in Australia.

How many months after your arrival in Australia did you start looking for a house to purchase your?
How many months did it take you to decide?
Did you buy a second hand, brand new or built to own?
How is the home purchase process like?
Most importanly, how much is the initial cash out? how many percent?
How many years is the mortgage?

if may ma add pa po kayo stories and experience with home buying! thanks so much!!!

pinoyinau

You need to consider the following:
1. Check you borrowing capacity - look for calculator, Do not underestimate your expenses for your own good.
2. Initial cash out - This include your deposit (minimum 5% of the purchase price), stamp duty (waived for first home buyer), solicitor (estimated $1,500), etc.
3. Lenders Mortgage Insurance (LMI) this is based on your Loan to Value Ratio (LVR) - Percentage of your Loan to Total Value of the home. The higher percentage of LVR the bigger LMI.
4. Check your repayments so you will know if you can afford it. Usually bank use 6% interest on your home loan application to see your capability even the actual rate they are offering is lesser than 6%. So you can also use that when completing the calculator. Usually loan is 30 years but will depend on your age. If you are at your 50s, bank might not be able to give you 30 years.
5. You can talk to the bank or mortgage broker to get the actual details of your capacity and repayments. The bank will give you pre-approval which is valid for 3 months but can be extended until you find your property you want to purchase. A letter (email) will be issued to you with the details of your pre-approval loan. This is not yet the final loan approval. There are some that requires you to meet some conditions (e.g. when you find your property, satisfactory valuation of the property, acceptable contract of sale, etc.)
6. Once you find the property, you can make an offer. If you want to hold the property, vendor asks for inititial payment (some asked for $1,000). But please note if your actual loan is not approve, then you might not be able to get a refund on this.

When making an offer, please consider below
* For established house - usually, the asking price is the bank valuation (but not all the time)
* For house to be built - You purchase or find the land first. Some settlement might be in 6-24 months from the time you inquire. But if you want the land, you need to inquire now but the loan repayment will only happen after the settlement date. While waiting for settlement date, you can save money. Some has issues on the bank valuation here. If the bank make a valuation (e.g. is $200,000) lesser than what you have offered/asking price (e.g. $250,000), you need to provide the difference as the bank will only give you a loan based on LVR (e.g. 95% of the valuation).
* For building/cost of building - They said do not do so much upgrade as it will affect the valuation
7. Contact the bank/mortgage broker to process the final loan approval
8. Find a solicitor - Best is not to sign a contract until a solicitor reviewed your contract. You can choose 30 - 90 days settlement.
9. Once you are happy with the terms of the contract, you can sign it and then pay the deposit required.
10. After settlement, you will start paying the repayments on the outstanding loan
* For established house - you can move to the house immediately after the settlement
* If you purchase your land only, prior to settlement date, you can start looking for the builder as looking for builder might take 2-4 months before you finalise the design of your house. So you need to consider timing when looking a builder as you want to start the building as soon as possible after the settlement of land purchase

Cost of owning a house (which is not applicable when renting)
1. Council Rate - This depends on the valuation of your property. Can be paid in installment based on the schedule (10 or 4 installment or lump sum)
2. Water rate - Quarterly - this includes sewerage in addition to your consumption. (e.g. $250 sewerage per quarter)
3. Content insurance (can be paid monthly or yearly)
4. Strata if applicable (quarterly)

pinoyinau

Please include Home Insurance as cost of owning a house. If you are paying strata, you do not need to have Home Insurance as it is covered by the Strata