What is the Process of Buying a House

11 March, 2024: Buying a home is a significant milestone for anyone and whilst it can be a thrilling experience, understanding the process of buying a house can also be quite daunting. In Australia, the process of purchasing a home requires a mix of financial planning, market research and timely decision making. The below insight will outline the primary steps of the process and should serve as a valuable resource for both first home buyers and upgraders who are seeking a refresh.

So where do you start?

Step 1: Understand Your Budget

Before diving into the market, it is imperative to establish your budget. Be clear on your savings and servicing capabilities and ensure that you consider the other costs associated with purchasing a home. Some of these will include stamp duty, legal fees and inspection reports.

Step 2: Obtain Loan Pre-Approval

The next stage in the process of buying a house is to get loan pre-approval by working with a mortgage broker or lender directly. This will provide you with a more accurate borrowing capacity figure and will show sellers that you’re a serious buyer.

Step 3: Start Your Property Search

Begin searching online, attending open houses and consider hiring a buyer’s agent or engaging a real estate agent who are experts on your intended purchase location. Ensure that you consider factors like location, size, public transport, future family requirements and the future growth potential of the property.

Step 4: Property Inspections

Once you’ve shortlisted potential properties, ensure that you conduct thorough inspections like building and pest inspections.

Step 5: Making an Offer

This stage of the homebuying process can be thrilling and emotional. It is important to stay level-headed when bidding and negotiating to buy. This step can be undertaken through a private sale or auction.

Step 6: Contact Review

Once your offer is accepted, you will receive a contract of sale. Your conveyancer or solicitor will read through this and review the contract.

Step 7: Finalise Your Loan

Secure unconditional or formal approval. Your mortgage broker or lender (if you’re working directly with your lender) will help you to finalise this.

Step 8: Settlement

This is the part of the homebuying process where the property title is officially transferred to you. Your conveyancer or solicitor will help to facilitate this process with the lender and the seller.

Now that you have a better understanding of the process of buying a house, what can you do if you’re struggling to come up with the upfront funds necessary to unlock the home purchase?

View.com.au published an article titled “Don’t have a 20pc deposit for your first home? Here are the alternatives”. The article explores the available options in the market for those who are unable to generate the sufficient deposit and stamp duty funds for a home.

Key Insight: FrontYa was mentioned as a third-party finance provider who doubles the deposit and stamp duty funds to help you get into your dream home sooner. In exchange, they require back their initial capital plus a 25% share in the growth of the property over a typical six-year term.

FrontYa and the Homebuying Process

If you wish to use FrontYa to help boost your upfront funds, it is important to understand where they fit into the typical process of buying a house. The process outlined above may change with some minor additional steps added. Let’s delve into how it would work:

  1. Additional Step: Submit your FrontYa pre-approval application on the FrontYa Online Portal to understand what FrontYa can match you with.
  2. Step 1 (Understand Your Budget):This will remain the same for the most part. With FrontYa’s boost, your budget will increase.
  3. Step 2 (Obtain Loan Pre-Approval): This will remain the same for the most part. You will obtain loan pre-approval with your new budget using one of FrontYa’s lending partners going direct to the lender or through your mortgage broker.
  4. Step 3 (Start Your Property Search): This will remain the same.
  5. Additional Step: Once you find properties that you like, you will submit them into the Online Portal for FrontYa to assess.
  6. Step 4 (Property Inspections): This will remain the same.
  7. Step 5 (Making an Offer): This will remain the same for the most part. You will be aware of FrontYa’s assessment of the property and its risk-based price which can be used as part of your negotiations.
  8. Step 6 (Contract Review): This will remain the same for the most part. You will also send the signed property contract through to FrontYa.
  9. Step 7 (Finalise Your Loan): This will remain the same.
  10. Additional Step: Once the settlement date is confirmed, FrontYa will send through the FrontYa Product Guide & Terms for you to sign and return.
  11. Additional Step: You will connect FrontYa with your conveyancer to organise the FrontYa funds for settlement.
  12. Step 8 (Settlement): This will remain the same for the most part. FrontYa will supply their share of the upfront costs at the settlement table via PEXA and will place their second charge (caveat and second mortgage) on the property.

The process for buying a house in Australia may seem complicated, but with proper preparation and understanding, you can navigate it with ease by engaging the right stakeholders. Remember to seek advice when needed, and soon enough, you’ll be enjoying the comforts of your new home.

To understand how FrontYa can help to boost your home deposit, contact us today.