Beginner's guide to the home buying process

The Order Matters More Than You Think

Most people start hunting for a property before talking to a lender. You'll save yourself weeks of frustration if you reverse that order. A home loan pre-approval tells you exactly what you can borrow before you start attending open homes, which means you're only looking at properties you can actually afford to buy.

Consider a buyer in Mount Eliza who found a townhouse they loved, made an offer, and only then discovered their borrowing capacity was $80,000 short because casual income wasn't being assessed at full value. The contract fell through, and they lost the property to another buyer. Getting pre-approval first would have flagged that income issue early, giving time to either adjust the budget or gather extra documentation to strengthen the application.

What a Lender Actually Checks Before Approving You

Lenders assess three main things: your income, your debts, and your savings history. Income needs to be stable and verifiable, which usually means payslips, tax returns, or business financials depending on how you're employed. Debts include credit cards, personal loans, car loans, and even buy-now-pay-later accounts, all of which reduce how much you can borrow. Savings need to show genuine accumulation over at least three months, not a lump sum that appeared yesterday.

Your deposit size directly affects your loan to value ratio (LVR), which is how much you're borrowing compared to the property's value. Borrowing more than 80% of the property value usually means paying Lenders Mortgage Insurance (LMI), which can add thousands to your upfront costs. A 10% deposit on a property at the median price in Mount Eliza would push you into LMI territory, while 20% avoids it entirely.

When to Lock in Pre-Approval

Get pre-approval before you make any offers. It's valid for three to six months depending on the lender, and it gives you a clear budget to work within. Pre-approval isn't a guarantee, but it means the lender has checked your finances and confirmed they're willing to lend you a specific amount, subject to finding a suitable property.

In our experience, buyers with pre-approval in hand move faster when the right property comes up. You're not waiting on bank responses while other buyers are already submitting contracts. Mount Eliza has a mix of family homes and coastal properties that can move quickly in certain price brackets, so having your finances sorted upfront makes a tangible difference.

What Happens After Your Offer Is Accepted

Once your offer is accepted, you'll sign a contract of sale and usually pay a deposit, typically 10% of the purchase price. That deposit is held in trust until settlement. You'll also need to arrange a building and pest inspection during the cooling-off period if you're buying in Victoria, which is three business days for most residential sales.

Your lender will then order a property valuation to confirm the property is worth what you're paying for it. If the valuation comes in lower than the purchase price, the lender may reduce the loan amount, which means you'll need to cover the shortfall with additional savings. This doesn't happen often, but it's worth knowing upfront.

Choosing Between Variable Rate and Fixed Rate Loans

A variable rate moves up or down with the market, which means your repayments can change. A fixed rate locks in your interest rate for a set period, usually one to five years, so your repayments stay the same regardless of what happens to rates elsewhere. Some borrowers split their loan between variable and fixed to get flexibility and certainty at the same time.

There's no universally correct choice. Variable rates often sit slightly lower than fixed rates, and they usually come with features like offset accounts and the ability to make extra repayments without penalty. Fixed rates give you predictable repayments, which helps with budgeting, but breaking a fixed loan early can trigger significant costs.

Offset Accounts and Why They're Worth Considering

An offset account is a transaction account linked to your home loan. The balance in the offset reduces the amount of interest you're charged, which can shorten your loan term and save you a substantial amount over time. If you have a loan amount of $500,000 and $20,000 sitting in a linked offset, you're only charged interest on $480,000.

Not every loan product includes an offset account, and some come with higher ongoing fees to access one. For owner-occupied borrowers who maintain a decent balance in their everyday accounts, the interest savings usually outweigh the extra fee. If your account balance is consistently low, the feature may not deliver much value.

Settlement Day and What You Need Ready

Settlement is when ownership officially transfers from the seller to you. It usually happens four to eight weeks after you sign the contract, depending on what's negotiated. Your lender will transfer the loan amount to the seller's solicitor, and you'll need to have your remaining deposit and settlement costs ready to go.

Settlement costs include things like government fees, legal fees, and adjustments for rates or water usage. Your solicitor will give you a settlement statement a few days beforehand showing exactly what you need to pay. Once settlement is complete, you'll receive the keys and the property is legally yours.

The Role of a Broker in the Process

A mortgage broker compares home loan options from multiple lenders and helps you apply for one that suits your situation. Brokers can often access rate discounts or loan products that aren't available if you walk into a bank branch directly. They also handle the paperwork, liaise with the lender, and keep the application moving through to settlement.

For first home buyers, a broker can explain which government schemes you're eligible for, how much you can borrow, and what documentation you'll need to gather. For buyers upgrading or investing, a broker can structure the loan to suit your broader financial goals, whether that's minimising repayments, maximising tax deductions, or keeping flexibility for future purchases.

If you're ready to start the process or want to know what you can borrow, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions