Step-by-Step House Buying Guide: What Everything Means

Reviewed by Christina Penrose

Buying a home is one of the biggest life decisions you can make. It can also be one of the most stressful and confusing times. Whether you're a first-time home buyer or searching for an investment property, this guide by Penrose Real Estate aims to answer all of your questions about what happens when and what the different terms mean when buying a home. 

Step 1: Finances — Are You Ready to Commit to House Buying?

Most people cannot afford to buy a home outright and will need a bank loan, known as a mortgage, to help finance their purchase. There are two parts to home loans, the deposit and the principal, which is the remaining amount you will need to pay to own your home outright. The term of the loan is normally 20–30 years, depending on the lender. 

Research the median house price in the area in which you want to buy. This will help you determine how much money you need for a down payment or home deposit. This will generally be 20% of the purchase price. 

Don't forget to budget for house buying costs

You will also need to have enough money to cover buying costs such as paying a solicitor or conveyancer to review the contract of sale and due diligence on the home you intend to purchase, such as a home inspection for building faults and pest problems. Legal fees, property inspections, homeowners insurance and property taxes, such as stamp duty, can set you back thousands of dollars, so you must be budgeting for them also. Many lenders will not approve your home loan without due diligence, such as a pest inspection or adequate home insurance. 

Find out more about the loan-to-value ratio and lenders' mortgage insurance (LMI) in this government guide to saving for a house deposit.

talking to bank about house buying

How much will the banks give you? Assess your borrowing power

Next, you will need to assess how much you can afford to borrow. When done with a lender, this is known as pre-approval. It's important to note that pre-approval is not a guarantee your application will be approved by the loan officer. 

You can use a mortgage broker to help you with this step or approach lenders on your own. You can also use online borrowing calculators to get a rough idea of your financial position but don't forget to consider how rising interest rates may affect your mortgage repayments. 

During this process of finding a lender and home loan that provides you with the right features (such as redraw or offset facilities), you should shop around as much as possible to find the best possible interest rate. The amount of funds a lender is willing to provide you with (called borrowing capacity) will depend on several factors, including: 

  • Your income and monthly expenses
  • Any other debt you have, such as car loans 
  • How much you have saved for a deposit as well as your savings history 
  • Your credit score 
  • Other large, regular financial commitments such as fees for private schools, etc.

Step 2: Now the Fun Part — Finding the right home

When house buying, it's critical to balance the location and lifestyle you desire with what you can afford. If you have pre-approval for a particular loan, stick to your budget when looking for the right home. Your first property purchase may not be your dream home and if you are buying with a partner, you may have to compromise. If you are a first-time home buyer, make a list of your must-haves such as the number of bedrooms and your ideal suburb and be willing to compromise on other features such as the layout or number of bathrooms. 

Let real estate agents know you are on the hunt for a home

Even if you choose not to use a buyer's agent, it pays to build a relationship with a reputable real estate agent such as the team at Penrose Real Estate. Your real estate agent should have extensive knowledge of the suburbs in which you are searching for a home and be able to guide you on what properties will suit your requirements. 

Found something in your price range? It's inspection time!  

Make a shortlist of properties that interest you and ask the real estate agent if the seller is willing to give you a copy of an appraisal report, damage report or recent building and pest inspections conducted. This is also the time you should seek your own inspections. Performing this due diligence can save you money in the future if the home has major structural or pest problems. It also helps during the negotiation process if major repairs are needed. If you are looking to buy an apartment, a strata report outlines any issues with the building.

inspecting before house buying

Get loan pre-approval before you make an offer or bid at auction

Before you go ahead and make an offer on a home, you will need pre-approval from a lender and have solicitors or conveyancers lined up to handle the paperwork. 

Request a contract of sale from the real estate agent and have your legal representative look over it. It will contain important information such as the settlement date, closing date (when ownership is transferred to the buyer) and matters relating to the title, such as a survey or easement.

Your legal representative will be able to explain your obligations under the contract as well as common contingencies (such as funding) that you may like to include should you decide to purchase the home. 

Step 3: The Negotiation — How to Make an Offer 

If you are happy with how the house presents and you have your finances in order, it's time to make the seller an offer. There are two ways to purchase a home in Australia — auctions and private treaty. Let's look at the differences between the two. 


If you buy a home at auction there is no cooling-off period, and you will need to pay a deposit, normally 10%. You will also exchange signed contracts straight away. There is also no listed price, and in QLD, the real estate agent is unable to give you a price guide. Therefore, if you're buying a home at auction, you need to be 100% sure you're making the right decision. 

Private treaty

A property being sold by private treaty will usually have an asking price. You can make a written offer to the real estate agent or ask for the contract of sale. If the offer is accepted and the contract is signed, you will need to pay a deposit (normally 10%) so that the seller does not accept another offer. A cooling-off period of 5 days usually applies, during which time you can withdraw from the sale should you wish to, and your deposit will be returned (less 0.25% of the purchase price).

You may have your conveyancer or solicitor review the contract before you sign it. Alternatively, once both the seller and buyer have signed, a copy will be sent to them. They will arrange the title transfer and inform you of the stamp duty costs.

You can make an unconditional offer where you buy the property outright or a conditional offer subject to certain conditions being met, such as finance approval and inspections.

You can find out more about ways to buy a property with someone else in our article The Difference Between Joint Tenants & Tenants in Common for QLD Properties Explained

Step 4: The Next Stage — Secure Financing with Your Bank

Let your lender know that you have made an offer on a home and apply to finalise your mortgage. You will need things such as identification documents and payslips to complete your application. The loan officer will send you a document to read and sign that will tell you the lender's valuation of the property and how much they will pay on settlement.  

discussing house buying

Step 5: Settlement: You're Officially a Homeowner

Congratulations, it's settlement day! You have battled the property market, survived the house buying experience and you are now a homeowner. On settlement day, the lender transfers the remaining sum to your solicitor, who then passes it on to the seller. It is also when you pay closing costs such as mortgage fees. The property title is then legally transferred to you, and you are given the keys to your new home. 

We're Experts at Finding the Right Home for the Right People 

At Penrose Real Estate, our motto is 'results built from trust'. With understanding and many years of experience, agents Grant and Christina Penrose help customers sell their family houses or find a new home by offering a personal touch that hinges on respect as well as results.

If it's unmatched local knowledge you're looking for, we have listings across Brisbane. Contact Brisbane's go-to real estate agency, Penrose Real Estate, today.