How the home-buying process works

You’ve seen it on TV: a woman in nice shoes takes a couple to three houses, then makes one low-stress phone call. Sold! Move in next week.

Unfortunately, the home buying process rarely works that way in real life. For a start, no one can go to that many open inspections in heels and still be upright. But mostly, there are a lot of steps in between that you should know about. And in a post-COVID world, the rules have changed even faster.

We’ve broken the home buying process down into bite-sized chunks to give you a clear overview of what to expect. Tick (and celebrate) each milestone off your home-buying journey as you go.

Step 1 – Make a budget, build a spreadsheet.

When you’re hoping to make an offer on a property, you need to get your finances in order. Your lender wants to see that you’ve made regular deposits into your savings account and that you’re living within your means.
A budget will help – and will often make you realise the easy ways to cut unnecessary expenses out, whether it’s seven streaming services or just how much a cheap pub night adds up when you go three times a week. We’ve also got some tips to help you stay on track while you save.

Find out how much you need for a deposit, calculate your regular repayments and work backwards from there.

Step 2 – Create a shortlist of what you want in a home.

Your first home isn’t always your dream home, but it is an important step on the property ladder. Sometimes finding the right home means being flexible on location or your property wish-list. If you want a backyard, you might need to look further out. If you’re desperate for a cool bar and vegan tapas within walking distance, you might need to compromise on living space to stay within budget.

Create a shortlist and rank it from most to least important. Room for chickens? Very important. Living at number 36? Probably less so. Inspecting potential properties can help you narrow it down – what you think you want can change when you see it in person.

Step 3 – Determine your borrowing limit.

How much you can borrow is important – it will shape where and what you can afford to buy. Your borrowing capacity is determined by a range of factors including your deposit, how much you earn and existing debts or liabilities. The more you can pay off and cancel before you apply for a home loan, the better.

Our Borrowing Calculator can give you an idea of how much you can afford to borrow but there’s no substitute for speaking with your ME Mobile Bank Manager.

Step 4 - Obtain approval in principle.

Approval in principle means you meet the lending criteria of your chosen provider pending your choice of appropriate home. The “in principle” part means you haven’t actually applied and been accepted for a home loan – yet. It’s a way to show you’re likely to meet the conditions when you do, so you can start shopping.

Step 5 - Start house hunting.

If this were a TV show, the cameras would start rolling now. A presenter-turned-agent would take you to four homes and demand you choose one.
In reality, this part takes guts, determination and an open heart. Your ideal home is just waiting to be found. Research the market so you know what’s a fair price for your area. Check out similar homes so you understand demand.

When you discover a property you’d like to buy, ask for a copy of the contract and send it to your solicitor or conveyancer for review. It’s also a good idea to arrange a pre-purchase building inspection to weed out any freeloaders, and strata report if you’re buying a unit.

Even though Australia’s been in a mostly fortunate position with COVID, until we get the all clear you’ll probably need to respect social distancing rules – whether it’s masks, 1.5m distance between other people, if they’re doing online auctions etc. All this information should be available on the property’s page and you can check your state government’s COVID page for regular updates.

Step 6 - Make an offer or attend an auction.

This is the big one. You’ve found your dream place. Your palms are sweaty just thinking about it. You’ve already named every plant in the courtyard.

If you’re lucky to enough to experience a physical auction, keep your cool. Remember your borrowing limit and your list of actual priorities. Then follow our tips for negotiating a house at the best price, or consider making an offer before an auction takes place.

Step 7 – Your offer’s accepted; time to exchange contracts.

Hooray! The vendor has accepted your offer. The home is yours.

From here, you and the vendor will each sign a sale contract. The contracts are then handed over (that’s called “exchanged” in the biz) to your respective solicitors or conveyancers. At this point, you’ll need to pay your deposit. Your solicitor will contact ME to discuss a settlement date.

Something you might have missed: at this stage you have a financial interest in the property. That means you’re responsible for what happens on it, including any accidents. It’s wise to take out building insurance at this step – in fact, if you take out a ME home loan it’s a condition of your contract.

Step 8 – Wait out the cooling-off period.

Depending on what state or territory you live in, there’s probably a cooling-off period now. That’s a chance for you to change your mind about your purchase. It might be up to a week long. If you do back out, there’s a chance you could lose part of your deposit.

Be aware also that there’s no cooling-off period if you’ve purchased at auction. That one is binding.

Step 9 – Settlement.

That’s a fancy way of saying the home is yours now.

It usually takes 6-8 weeks following the exchange of contracts, but the exact length of time will be specified in your contract. Your solicitor or conveyancer will work behind the scenes to get the documentation ready to transfer the title of the property into your name at settlement, and your ME Mobile Bank Manager will be busy getting your loan ready. We’ll stay in touch to let you know how things are progressing.

At this point you need to pay stamp duty on your home and finalise legal fees, plus any adjustments for rates and utilities.

Step 10 – You’re now a homeowner.

Congratulations! The deal is done, the keys are in your hand, and you’re on your way.

Make sure you’re well-equipped for moving day, and don’t forget to plan your housewarming – your friends and family will want to share the excitement of your first home.

We’re here to help

Your ME Mobile Bank Manager is here to help you enjoy a hassle-free home buying process. Contact us on 13 15 63 if there is anything you are unsure of or take a look at our FAQs.