How To Buy A House In NSW

Buying a home in New South Wales (NSW) can be an exciting and rewarding experience. From the bustling city of Sydney to the picturesque regions, NSW offers a diverse range of housing options to suit all lifestyles and budgets.

With its strong property market and attractive coastal living, it’s no wonder that buying a home in this beautiful state is an attractive prospect for many.

This guide will help you get ready to buy a house in NSW and is divided into three sections:

• 1. Being Financially Prepared To Buy
• 2. Grants And Schemes Available For First-Home Buyers In NSW
• 3. Finding The Right Property
• 4. Steps To Buying A House In NSW

How To Be Financially Prepared To Buy A Home In NSW

An important first step to buying a home in NSW is determining how much you can afford.

• Most people need to borrow to buy their homes. This means getting approved for a home loan from a lender.
• Before you start looking for a property, get pre-approved for a mortgage so you know how much you can afford.

Why Should I Get Pre-Approved To Buy A Home In NSW?

• You demonstrate to the seller that you are ready to proceed, especially when competing with other buyers for the same home.
• You will better understand the mortgage application process
• You’ll know exactly how much you can afford to invest.

How Much Deposit Do I Need To Buy A House In NSW?

You need a deposit of at least 5% of the property value to buy a home in NSW. This does not include the other costs associated with buying, like stamp duty, registration fees and valuation fees.

For most 5% home loans in NSW, you must pay Lenders Mortgage Insurance (LMI). LMI is applicable when borrowing more than 80% of the property value. There are ways you can avoid paying LMI.

What Are The Costs Involved In Buying A House?

We will divide the costs associated with buying a house in NSW into two categories:

1. Upfront costs: These expenses must be paid before or at the time of purchase.

2. Ongoing costs: These expenses must be paid regularly after purchasing a property.

Tips For Getting Approved For A Home Loan

• Budget for the costs associated with buying and owning a property in NSW.
• Save at least a 5% deposit
• Use the postcode calculator to find out if lenders accept the location.
• Maintain a good credit score
• Have stable employment and income
• Calculate your borrowing power
• Understand your Debt-To-Income (DTI) ratio

Grants And Schemes For First-Home Buyers In NSW

The NSW Government has various grants and schemes for first-home buyers in NSW. To qualify for them:

• You must be purchasing your first home in Australia.
• You must be at least 18 years old.
• At least one of the first-home buyers must be an Australian citizen or permanent resident.
• You and your spouse or partner must never have owned or co-owned residential property in Australia.
• You and your spouse or partner must never have received an exemption or concession under the scheme to which you are applying.
• You must move into the property within 12 months and live there for at least six continuous months.

Here’s a summary of the grants and schemes available for first-home buyers in NSW:

• First Home Buyers Assistance Scheme
• First Home Owner Grant (New Home)
• First Home Buyer Choice
• First Home Guarantee
• Regional First Home Buyer Guarantee

Family Home Guarantee

The Family Home Guarantee is one of the three programs available under the Home Guarantee Scheme. The other two are:

• First Home Guarantee
• Regional First Home Buyer Guarantee

What sets this scheme apart from the other two are:

• The Family Home Guarantee helps single parents with children as dependants buy an existing home or build a new one with a deposit as low as 2%.
• It’s available for Australian citizens who are single parents and either first-home buyers or previous homeowners who do not currently own a home.
• The annual taxable income must not exceed $125,000.

Shared Equity Schemes Available In NSW

A shared-equity scheme or arrangement is when an equity partner acts as both the lender and investor in a property. The equity partner can be the lender or a third-party investor, such as the government.

There are two shared equity schemes available in NSW:

• Shared Equity Home Buyer Helper (which is available only in NSW)
• Help To Buy Scheme

Finding The Right Property

Now that you know how much you can afford, you need to find the right property to buy. Before you look for the right property, make a list of must-haves and nice-to-haves. This helps you narrow down the necessary features to buy a home within your budget.

There are many ways you can research to find the right property in NSW:

• Talk to local real-estate agents and gather as much insight as possible.
• Take a walk or drive around the area.
• Talk to the local residents and find out how they like (or don’t) like about living there.
• Visit the NSW Government’s website to find out if there are any developments planned.
• You can use the NSW Valuer General portal where you can search land values and property sales information for free.
• Get information online about current property listings, median prices, auction clearance rates and common property types.
• Research information on recent sale prices for similar properties to ensure the seller is not underquoting the property.
• You can also attend auctions in areas you’re interested in buying. This paints a realistic picture of how much properties are selling for compared to their advertised prices.

Inspect The Property

If you’ve narrowed down the list to a few properties, go for a pre-purchase inspection to know the condition of the home you’re buying.

While online and virtual tours are available, these might not show an accurate picture of the property. That’s why it’s important to get the right people to do this part for you. You can either ask a trusted friend or family member or engage the services of a buyer’s agent.

If you go for an in-person inspection, take your time to get a thorough look at the property. Let the seller know beforehand if repeated visits are required.

These are some things you can note when inspecting the property:

• Lift carpets and rugs to see if they’re hiding dampness or rot.
• Try the taps to see if hot water is running properly.
• Try the light switches.
• Look at the fuse box and check the circuitry age and if there is an Earth Leakage Safety Switch.
• Smell the property. The use of strong fragrances could mask unpleasant smells.

What Are The Steps To Buying A House In NSW?

After finding the right property, you start the process of buying a house in NSW. We’ve outlined the seven steps you take when buying a home in NSW:

• Step 1: Take the help of a licensed solicitor or conveyancer who will help you from making the offer right through to settlement.
• Step 2: Make an offer to buy a house.
• Step 3: Review the Contract of Sale.
• Step 4: Exchange the Contract of Sale. This is when you pay the deposit and stamp duty.
• Step 5: Conduct a pre-settlement inspection.
• Step 6: Prepare for settlement.
• Step 7: Move into your new home.

Making An Offer To Buy

There are usually two ways you can buy a house in NSW:

• If it’s a private treaty, you make an offer directly to the seller or their real estate agent.
• If it’s through auction, you need to register as a bidder. If your bid is successful, you must sign the sale contract and pay the deposit upfront.

What Is The Process Of Buying A Home Through A Private Treaty?

In a private treaty, the home is listed on the market for a set price with no deadline for sale to be complete. Here’s how the process of buying a home through a private treaty in NSW looks like:

• Ask the seller for the Contract of Sale and have it reviewed by a licensed conveyancer or solicitor.
• Organise a pest and building inspection.
• Get pre-approved for a home loan.
• Make an offer for the home.
• Negotiate the sale price.
• Once the negotiation is complete and the seller accepts your offer, you exchange the Contract Of Sale.

What Is The Process Of Buying A Home Through Auction?

Before you bid at an auction, make sure:

• You are pre-approved or unconditionally approved to know how much you can borrow.
• You have money to pay the deposit.
• You have inspected the property.
• You have reviewed the contract with your solicitor or conveyancer.

During an auction, interested homebuyers place their bids for the property. An auctioneer controls the process until the highest bid wins. If you are the winning bidder, you sign the Contract of Sale and pay the deposit immediately after the auction.

Understanding The Contract Of Sale

Before you make an offer on the house, you must review the Contract of Sale.

A Contract of Sale is a legal document with terms and conditions of the sale and information about the property and land. You have to ask the seller for a copy of the contract and ask your solicitor or conveyancer to review the:

• Deposit amount and due date.
• Settlement details.
• Title documents, including zoning certificate and drainage diagram.
• Special conditions, including if the home will be vacant or tenanted.

Exchange The Contract

The final step is to exchange the contract and prepare for settlement. Before exchanging contracts, you need to:

• Complete all relevant property inspections and checks.
• Review and discuss the Contract of Sale with your solicitor or conveyancer.
• Confirm financial agreements.

Pre-Settlement Inspection

Get a thorough inspection of the property before you sign. A pre-settlement inspection can be done a week before settlement to ensure that since you first exchanged the contract, everything is as it should be.

The two major inspections that take place in a pre-settlement inspection are:

• A building inspection that checks for structural integrity and soundness.
• A pest inspection that examines the property for the presence of termites and pests.

Exchanging the contract legally completes the property sale process. The seller has accepted your offer, and both parties have signed the Contract of Sale. At the time of exchange, you need to pay the deposit and stamp duty for the home you’re buying.

Cooling-Off Period

Private treaty sales in NSW have at least a five business day cooling-off period after the contracts are exchanged. During this period, you can withdraw from the sale as long as you’ve given notice. There are penalties for withdrawing from the contract, which is worked out as a percentage of the sale price.

Properties bought at auction do not have a cooling-off period.

Settlement Day

The final step of the home buying process in NSW is the settlement.

Settlement takes place around six weeks after contracts are exchanged.

During settlement, the rest of the sale price is paid and you are the legal owner of the property. The legal documents of the house are transferred to your name.

At the time of settlement, your lender will disburse the funds from your home loan, and you will receive the keys to your home. Congratulations, you are now the owner of your home in NSW. Get ready to move into your new home.

Unlock Your Dream Home With Us

Purchasing a property in NSW can be an overwhelming experience, but it doesn’t have to be! A mortgage broker can be your secret weapon to simplify the process.

With a broker on your side, you’ll be able to secure a mortgage that fits your budget, lifestyle and goals. Unlike going it alone, mortgage brokers can use their established relationships with lenders to negotiate better terms and rates, saving you money in the long run.

So, if you’re ready to take the leap and buy property in NSW, Home Loan Experts’ mortgage brokers are here to help. Call us on 1300 889 743 or enquire online today.