Tips And Advice

How Much Do I Need To Buy A House?

Buying a house is a major investment, and it’s important to make sure your finances are in order before starting the process. Once you have started to gain an understanding of the market, the next step is to start thinking about how you’re going to pay for it. So how much money do you need?

How much does it cost to buy a property?

How much are you willing to pay upfront to secure your home? The simple truth is that the more deposit you pay, the more likely you are to get a loan.
The Australian Securities and Investments Commission recommends having a deposit of 20 percent of the purchase price of your anticipated property. Some states will allow as little as 5 percent for a deposit.
Of course, it depends on your lender and their rules, as well as your financial situation.

Other Costs
Inspection fees are not compulsory, but it is a good idea to get a house inspection to uncover any likelihood of hidden costs you may have to pay once you’ve bought the property.
Loan establishment fees, legal fees and stamp duty all vary from state to state, so check in with your local authority.

How do I get a home loan?

Buying a new home? It’s an exciting decision, but it can quickly become overwhelming if you’re not prepared.
Nearly half of all Australians who take out property finance use a broker to do the hard work for them so you’ll be in the right position to secure your new home.

How does it work?
A mortgage broker can compare hundreds of loans – from big-name financial institutions you know and trust, to small banks and credit unions – and works with you to match the right loan to your goals and financial position.

A good broker will:

  • Assess your needs and financial position and recommend competitive loan options.
  • Take the time to explain the full process, from application to settlement
  • Do most of the legwork, acting as an intermediary and negotiating with the lender.
  • Complete mountains of paperwork, leaving you to simply review and add your signature.
  • Liaise with key parties, including solicitors and real estate agents (and you!) to ensure a smooth settlement.
  • Perform ongoing reviews for you after settlement to make sure you are always on a competitive loan.

Four Steps To Securing Your Home Loan

  1.  Set your goal
    Once you know the type of property you want and have a rough idea of what it’s likely to cost, set yourself a target for saving a deposit. Remember, if your deposit is less than 20% you may need to pay Lenders Mortgage Insurance or get a guarantor to offer their property as security – be sure to factor this into your plans.
  2. Talk to a broker
    Before you start actively looking for a property, it’s worth speaking with a broker. They’ll give you an accurate assessment of your borrowing capacity (more accurately than an online calculator) and determine your eligibility for government grants. Your broker will explain all the government fees and charges and ensure you’ll be eligible for a loan when the time comes to buy.
  3. Get the green light
    Whether you’re bidding at auction or placing an offer with an agent, you’re in a stronger position with a pre-approval. Pre-approval is essentially a green light from a lender to spend up to a certain amount. This means you’ll know how much you’ve got to work with. You’ll usually receive pre-approval within a few days of application. It’s generally valid for three to six months and assumes your financials stay the same.
  4. Close the deal
    Whether you buy at auction, by private treaty or off-the-plan, securing a property is cause for celebration. But before you pop the champagne, you’ll need to move fast to organise a few important things:
  • A holding deposit – usually $500 to $1,000 or 5-10% for auction purchases
  • A solicitor/conveyancer – your broker can recommend someone they trust to take care of the legal work
  • Notify your broker – so they can quickly move you to formal approval.

Final Credit Assessment
During the time when you are closing the deal, the lender will value the property, process your application and make a final credit assessment. If you haven’t already, you’ll also need to pay the full deposit at this point.

If you would like to know more about securing a loan in South Australia, get in touch with our finance broker, David Nguyen on 0403 714 258.

Additional Information:

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