How to Buy a House in NSW
If you’ve never purchased a home before – or if you’ve previously bought in another state – you may be confused about how to move forward with fulfilling your home-ownership dream.
There are basically 5 main steps to buying a house in NSW:
1 – Arrange your finance
2 – Research & inspect properties
3 – Negotiate a sale price
4 – Appoint a conveyancer or solicitor
5 – Negotiate contracts & pay a deposit
Step 1 - Arrange your finance
Before you get too excited about buying a new home, it’s wise to organise your finance.
In Kyogle the median house price is around $260,000 and has been slowly rising as demand increases. Before you start searching around for your dream home, speak to your bank or a mortgage broker to get a clear idea of how much you can borrow. Depending on your situation, you’ll need a deposit of at least 10%, so hopefully you’ve been saving!
Once they’ve let you know how much you can borrow, calculate the regular repayments into your budget to make sure that you can comfortably pay your mortgage – and keep in mind that interest rates are bound to go up in future after years at record lows.
This step is crucial – you don’t want to find your dream home only to discover you can’t actually afford it.
Step 2 – Look at properties
Now that you know what you can afford, it’s time for the fun part – finding your dream home!
Two major points to consider:
- Location: do you want to enjoy the convenience of town or the peace of the country?
- Requirements: how many bedrooms/bathrooms/garages/acres do you actually need? Think about what you really need in a home and what you may be willing to compromise on. Carefully consider cost of potential renovations as well as ongoing expenses such as council rates or maintenance costs.
Once you get a clear idea of what you’re looking for in a property, check out our website or contact our office to help narrow down your search and start arranging inspections for suitable properties.
It is advisable to have a good idea of what you want (and a reasonable idea of what your budget can buy!) before you look at too many places in person as it is easy to get overwhelmed with so many options. We usually recommend looking at no more than 3 properties in one day as otherwise you may end up tired, confused and no closer to finding your dream home.
Your initial inspection of a property is really important – not only will you be able to get the ‘feel’ of whether or not it may work for you, but you can also rule out any potential issues or required renovations.
Step 3 – Making an offer
So you’ve finally found a property you love! It’s time to make an offer, but what exactly does that involve?
Prior to making your offer, you may want to get advice from any number of professionals, such as building inspectors to check the home’s structural integrity, or your solicitor to read through the contract for any potential issues. However, please note that any such advice will be at your own expense – whether the sale goes forward or not.
Once you’re ready, speak to your real estate agent, who will negotiate a selling price with the vendor. This can be a quick or a bit of a longer process depending on the situation. In NSW, it is acceptable to submit an offer either verbally or in writing. However, please ensure you let your agent know if you have any special conditions on the purchase, such as the sale being subject to finance or satisfactory building/pest inspections, or a faster or extended settlement period.
When your agent lets you know that your offer has been accepted, congratulations! However, don’t get too excited just yet, because there is still work to be done.
Step 4 - Organise legalities
Next you’ll need to appoint a conveyance or solicitor to help you along this more formal stage of the process. Legal documents need to be signed and exchanged in order to complete the purchase of the property, so it is highly recommended that you appoint a legal professional who you trust. This person must be licensed with NSW Fair Trading, and they should also hold professional indemnity insurance to protect you from any mistakes made during the sales process. Our office is more than happy to assist you in finding a conveyance or solicitor to suit your needs.
Whether you use a conveyancer or a solicitor when you are buying a house in NSW, they will do the following:
- Reviewing and assessing the sales contract
- Exchanging the contract with the vendor’s solicitor
- Arranging the deposit, stamp duties and other payments
- Preparing the mortgage agreement
- Reviewing any payments owing on the property
- Arranging the change of title
- Representing you during settlement
Step 5 - Negotiate contracts and place a deposit
While your solicitor helps you navigate through negotiating the sales contract, you will also need to pay a deposit, often 10%. This deposit shows the vendor that you are serious about the purchase. However, this does not mean the property will definitely be sold to you; on the flip side, you can get the deposit refunded in full up until the contracts are exchanged. The deposit is held in our trust account up until the property settles.
In NSW, once the contracts are exchanged, this is when we can officially say the property is sold as this is the legal completion of the purchase process. A five day cooling off period after exchange is standard when buying a house in NSW. This period allows either party to withdraw from the contract with written notice. If you do withdraw from the contract during cooling off, you will be required to pay the vendor 0.25% of the agreed purchase price.
After exchange, settlement is usually 28 or 42 days, though other periods can be negotiated to suit your needs. This period is used to finalise your payment or mortgage on the property and for your conveyancer to prepare legal documents for settlement.
Your conveyancer will meet with the vendor’s side and both parties’ bank representatives on settlement day to exchange cheques and officially transfer the property over to you. Once this is done…. the property is legally yours and you are officially a homeowner!