Buying a Home

Buying property in Victoria involves research and careful consideration all options to ensure the property is right in terms of price, location, value, size and lifestyle.

The Law Institute of Victoria (LIV) runs free seminars for people interested in buying their own home. These seminars cover legal, financial and other issues, such as how to spot building problems when looking at a house.

On this page:
Cost of housing
Housing types
Finding a house or apartment to buy
Home inspections and valuations
Buying a house
Costs
Borrowing money
Grants
Further information

Cost of housing

House prices in Victoria vary widely from region to region. Affordability will be key in choosing where you live and what style of home you live in.

Once you've decided to buy, it is worth investigating different areas. Neighbouring suburbs can vary in price enormously, as can different properties in one suburb.

Before you buy you should look at what other buyers have paid for homes in that area. For a basic guide to the cost of housing in each major regional and metropolitan town, see our map of Victoria.

More detailed information is also available from the Domain website and the Australian Property Monitors website.

For a general guide to cost of housing in Victoria, see the table below.

Source: Real Estate Institute of Victoria

Housing types

In Australia, houses are generally free-standing buildings, or attached buildings, but with no neighbours living above or below you. Units or apartments generally have at least two floors of homes in a building, so that your neighbours may live beside, above or below you.

Houses and apartments may be as little as a few months old, or anywhere up to 150 years old. They may be made of brick, concrete, or timber (sometimes called weatherboard).

Homes usually include one to four bedrooms, a kitchen, one or two bathrooms, laundry and living space. Larger homes also include a second or third living areas/dining rooms, and a garage or carport.

Finding a house or apartment to buy

Houses and apartments are generally bought and sold through real estate agents, but you can also buy direct from the owner. To find real estate agents in your area, use the Real Estate Industry of Victoria's agency search tool.

You can find properties for sale in real estate listings in the major metropolitan, local and regional newspapers. There are also many websites available to help you find a home to buy. Websites include:

• Domain.com.au
• Realestate.com.au
• Realestateview.com.au
• Myhome.com.au

Home inspections and valuations

You can view a property for sale either by attending an advertised open for inspection or appointment with the relevant real estate agent.

If you are buying a house or apartment, you may want it inspected by a builder or architect to see if there are any problems with the property. ArchiCentre and the Housing Industry Association (HIA) can inspect the property and provide you with a report for between A$350 and A$500.

If you are borrowing money to purchase, the lending organisation will usually have a valuer inspect the property prior to lending. However, you may want to have an independent valuation done from the Australian Institute of Valuers and Land Economists. Cost varies depending on the property.

Buying a house

Most homes in Victoria are sold by private sale or by auction. Private sale means that you buy the property at the advertised price or negotiated price with the vendor (owner), either through a real estate agent or direct with the vendor themselves.

At auction, you compete with other bidders in an open forum. In this case, the 'selling range' provided by the real estate agent is only an indication, and properties often sell for higher than the advertised selling range. You can find property auction results on the Domain website and in major newspapers.

Making an offer

Whether a property is for private sale or auction, you might consider making an offer. This means that you put in writing an offer to buy the house. The seller of the house may choose to accept your offer, or may offer to negotiate, or may reject your offer.

Any offer you make is not legally binding until both you and the seller have signed a Contract of Sale or Contract Note.

Navigating your way through the property purchasing process can be difficult - some people chose to appoint a buyer's advocate to find properties that meet your requirements and/or to represent you at auction or at the negotiation table.

Legal advice and conveyancing

It is strongly recommended that you appoint a solicitor or qualified conveyancing agent to handle the legal paperwork associated with the purchase of your property, once your offer has been accepted.

Costs

It is crucial that you organise finance before making an offer or bidding at auction. You must ensure that you can cover the deposit if your bid or offer is successful (a deposit is generally 10 percent of the purchase price), and have the remaining money available for settlement. Settlement of the property usually happens between 30 and 120 days after you buy the property.

As well as your deposit, you should allow money for:

• stamp duty charged by the State Government, which is based on the property value
• loan application and other borrowing costs
• land title transfer fee and mortgage registration fee
• any council rates, water, power or gas charges, or body corporate fees (if the property is an apartment or unit in a body corporate block)
• legal and conveyancing costs
• the cost of moving into the new home
• the cost of any repairs or renovations that will need to be done before or when you move in
• building inspection fees
• rates and utility connections
• ongoing mortgage repayments
• home and contents insurance.

Home insurance

Whilst not mandatory, most Victorians take out insurance cover for their homes and belongings. There are many different companies offering insurance products.

For more information on selecting an insurance policy, download Consumer Affairs Victoria's Insurance Factsheet (PDF - 84KB).

Power and water

Before moving into your home, you need to connect your utilities such as electricity, gas, water consumption and telephone. The real estate agent can often refer you to different providers. For more information and a list of gas, electricity and water providers, visit the Essential Services Commission website or Your Choice website.

Borrowing money

Most people borrow at least some of the cost of buying a house through a home loan.

Home loans

There are a number of different options for borrowing money for your home including the major banks, credit unions, mortgage brokers, building societies and specialist home loan lenders. All lenders offer products with different features and conditions. Research carefully to understand the options available including in-built fees including exit fees and the interest structure (variable or fixed term).

Common home loan product options include:

• fees including monthly or yearly account fees, exit fees (if you pay the loan out before the agreed end date) and application fees
• redraw facilities, which enable you to re-borrow money you've already paid
• interest rates - which vary among lenders and can be variable (subject to market changes) or fixed for a period of time.

It is also possible to find the right home loan through a mortgage broker. Mortgage brokers can compare different home loan products for you and make recommendations to suit your needs. They usually get paid a commission by home loan lenders - so you should check the information independently.

Once you've decided on a home loan product, you need to apply for a loan. If you are successful, most lenders will pre-approve your loan, so you know how much you can borrow before you begin house hunting. How much deposit they want will vary from lender to lender - but they may ask you to take out mortgage insurance if you are borrowing more than 80 percent of the property's value.

Online mortgage calculators can help you work out what you could borrow and how much it will cost you to repay the loan - these can be found on the following websites:

• Mortgage Choice
• Your Mortgage
• EChoice
• Ninemsn's Money

Grants

Australian permanent residents and citizens who are buying their first home in Australia are eligible for the Australian Government's First Home Owner Grant.

This grant varies depending on whether you are buying an established home or building or buying a new home. On top of this, you may also be entitled to receive a Victorian First Home Bonus payment. For more information about these grants, visit the State Revenue Office's website.

Further information

For more information about buying a property, download Consumer Affairs Victoria's booklet, Real Estate - A Guide for Buyers and Sellers (PDF - 782KB).