# Australian home buying rules



## lightpanther (Apr 11, 2010)

Hello.

I have a question to ask about the rules for buying a home in Australia. It's probably a dumb question., but well, I haven't done this before 


Is there a way to secure or put a securing deposit on a place several months in advance of actually moving, so that I don't have the terribly stressful situation of not knowing whether I'm going to be able to find a place for myself (+ pets). I'll be starting a course in Oz at the start of 2011, so getting big loans is going to be out of the question. I can maybe manage a deposit depending on how much it is, but certainly not the entire amount. I also have a place to sell in US and am very nervous of doing so, not sure whether I will be able to find a place in Oz within budget =240k USD).

I look forward to any advice you mayt offer, and thank you in advance!


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## amaslam (Sep 25, 2008)

It is possible but rare. It depends if the person selling the place (the vendor) you want agrees to it. You have a period from the time you place the deposit and sign a contract to buy a place to the time you own the place, in the US this is called closing and in Australia it's called settlement. This is normally 6 weeks from the time you sign the sales contract. 

Some vendors have longer periods (i.e. those building a place which is not ready yet to move into), but you need to seek these out. 

At settlement date you will need to be able to provide the funds (i.e. bank mortgage, cheques) so you can own the place.



lightpanther said:


> Hello.
> 
> I have a question to ask about the rules for buying a home in Australia. It's probably a dumb question., but well, I haven't done this before
> 
> ...


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## kaz101 (Nov 29, 2007)

When we were moving from the UK to Australia we managed to negotiate a settlement (closing) date for 5 months after we'd put a deposit on the property. We explained our situation (moving from the UK in July) even though we were buying then (February) and the sellers were happy with that. We were lucky in that the market in that area was slow (they were happy to have a buyer) and they were building a house so it would give them more time to get it completed properly. 

As Amaslam said you still need to provide a deposit shortly after the contract is signed and then the rest of the finance at settlement. 

We managed to get an investment mortgage so it was based on the income we were earning in the UK. Your credit record won't follow you when you move country so you'll be starting from scratch and you're not likely to get a mortgage unless you can prove your income. I mention this because you said you were starting a course and didn't say starting a job. 

Regards,
Karen


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## Michelle_S (Jul 17, 2009)

Hi Karen,

May i know if you already a PR when you bought the house in Feb? and did you face any difficulties in securing a mortgage loan at that time? 

My husband and I are thinking of buying a house in Adelaide while we still have income proof back in our home country before our application for migraiton is approved. Do you know if it is possible? and how complicated will that be for a foreigner to own a house and do we have to do any paper work when our status changed to PR? 

Thanks.

Regards,
Michelle


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## kaz101 (Nov 29, 2007)

Michelle_S said:


> May i know if you already a PR when you bought the house in Feb? and did you face any difficulties in securing a mortgage loan at that time?
> 
> My husband and I are thinking of buying a house in Adelaide while we still have income proof back in our home country before our application for migraiton is approved. Do you know if it is possible? and how complicated will that be for a foreigner to own a house and do we have to do any paper work when our status changed to PR?


Hi Michelle, 

The first place we bought in Australia (some years ago) we didn't have PR but the apartment had FIRB approval (FIRB: Foreign Investment Review Board - Home). When we bought our home we did have PR. We used a mortgage broker to get us the best deal and we got an investment mortgage so we could rent out the place if we were delayed. 

It depends on what you want to buy. Check out the FIRB rules since they have changed since we bought our first property over here. Back then you didn't need any visa at all to buy here but it had to be FIRB approved and it had to be a brand new property. 

You'll need a conveyancer (they are used in South Australia rather than a solicitor) to do the paperwork to buy a property and often the same conveyancer is used for both buyer and seller (yes I know that seems strange). 

No there is no extra paperwork when our status changed to PR (or citizen for that matter). 

We were advised to buy a house before we moved over because we're both self employed and so getting a mortgage once we had moved would be tough. 

This was a few years ago (2007) so I've no idea how easy it is to get a mortgage when you're a foreigner now. 

Hope that helps,
Karen


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## Michelle_S (Jul 17, 2009)

Hi Karen,

Thanks for the info. Now I know where I should start looking. : >

cheers
Michelle


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## lightpanther (Apr 11, 2010)

Thanks for the replies. Yes, I am (and will be) a student, so if there are any specific limitations that apply to me in terms of buying a place, I need to know what they are. As mentined, I can put a deposit down, but I can't imagine getting a mortgage. The "settlement" would need to be on successful selling of my home here. I take it if that doesn't happen, I would lose a depost. Or...would sellers there do it that way anyway (waiting on a sale of the buyer's home)?


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## kaz101 (Nov 29, 2007)

When we signed the contract I think as were asked how the rest of the payment would be made (by a mortgage) and a settlement date was written into the contract at that stage. 

Speaking personally I wouldn't agree to settlement on whenever your place sells since if I'm trying to buy somewhere else (which most sellers are) then I wouldn't be able to do that. 

Could you rent somewhere until your house sells? I know you may not be as settled but I think it would be easier to buy a place that way.


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## lady.lee (Jul 10, 2010)

Lightpanther, are you moving to Oz permanently? Or is it just for study purposes? You could make the purchase of australian house with a long settlement conditional on the sale of your house in america, but to be honest, you would need to find the perfect vendor that would be happy to do that. Some might be happy for a long settlement, but not many would like the risk of waiting ages and then maybe not settling say 5 months later because your house doesn't sell. It could be very hard trying to find a property seller who would be happy with those conditions.

Your other option would be to do what some-one else mentioned above and apply to rent over a fixed term period of say 3-6 months, then once you have settled here and know the area better, find a property to purchase. OR, you might need to wait until you've sold your home and then have the funds clear to be a cash buyer. Good luck!


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## barneybags (Jun 17, 2010)

Hi there... We are moving over to Melb next year ( our visa is already validated and we have PR ). I didnt realise there was such a thing as an Investment mortgage and we are very interested in looking at this option. We have a dog we are bringing over and really dont want to rent.. can you advise any links I can look at to investigate further? How long did your process take to get the mortgage etc?


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## kaz101 (Nov 29, 2007)

barneybags said:


> I didnt realise there was such a thing as an Investment mortgage and we are very interested in looking at this option. We have a dog we are bringing over and really dont want to rent.. can you advise any links I can look at to investigate further? How long did your process take to get the mortgage etc?


The mortgage broker we used doesn't do mortgages any more so I can't recommend him any more. He was recommended to us so I haven't got any links to suggest. We got pre-approval for a mortgage then started looking for a property to buy. It didn't any longer than a mortgage usually takes - it was a few years ago now so I can't remember exactly how long it took.


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## lightpanther (Apr 11, 2010)

I am looking at the possibility of renting first, but the pets seem to be the bottleneck on that one. In USA it is easy as pie to find places to rent with pets. In Oz, it seems to be almost IMPOSSIBLE!


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## barneybags (Jun 17, 2010)

Hi I have been talking to a mortgage broker about an Investment mortgage. Can I ask did you get pre approval and buy a house before you moved out to Oz or did you just get pre approval? They are saying that we cannot get pre approval and then move out to find a place as our circumstances would have changed.


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## kaz101 (Nov 29, 2007)

barneybags said:


> Hi I have been talking to a mortgage broker about an Investment mortgage. Can I ask did you get pre approval and buy a house before you moved out to Oz or did you just get pre approval? They are saying that we cannot get pre approval and then move out to find a place as our circumstances would have changed.


We had pre-approval while in the UK (January), signed the initial contract (February while on holiday in Oz) and completed (settlement ) while in the UK (June). We moved out to Oz about a month after we'd bought the house in July. 

Regards,
Karen


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## cgvaughan (Jul 31, 2010)

Hi all, The FIRB rules have changed very recently in May 2010 and basically require those that do not hold Australian Citizenship or Permanent Residency to make an application to the government. This application will generally always be approved (so nothing to worry about) if you are going to live in that property as the government has no issues with new residents of Australia owning their own home. What they are worried about essentially is foreign investors buying up Australian property pushing up prices for Australian Citizens.

Barneybags, you would be able to buy investment property as you hold a permanent residency visa (see the exceptions to the requirement of a FIRB application here.

You will note fourth bullet point down provides the exemption.

Based on this you would be free to purchase a property even while living overseas. 

The main point i would make though initially is how are you planning on finding the property you want to buy? This is often the difficult part when living overseas as most people, if they are looking for something they want to eventually move in to, want to be able to walk through the property, check out the street etc. If you are not planning on taking a holiday out to Australia before hand then a good option here is to make use of a buyers agent who can do the leg work for you, find you the right property based on your requirements and then take care of the entire transaction. Issue with buyers agents is they charge normally about 2% of the purchase price however, in my experience, they typically save you more in the purchase price than you would have achieved yourself doing your own negioating. 

As for *[link removed by moderator]* home loan finance for foreign citizens (temporary residents), the main issue these days is deposit. Generally a 20% deposit plus your costs like stamp duty is required however there are exceptions to this. STamp duty varies from State to State but if you allow 4% of the purchase price that should be sufficient. You can certainly rent the property out if you like, no issues there. However, if you do move into the property within 1 year of purchase (and you hold a permanent residency visa), then the first home owners grant (FHOG) would be available to you. The FHOG is federal government assistance to first home buyers of $7000. There are some State government incentives as well which generally apply if you purchase in a regional area.

I hope this helps a little with your questions.


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## cgvaughan (Jul 31, 2010)

barneybags said:


> Hi I have been talking to a mortgage broker about an Investment mortgage. Can I ask did you get pre approval and buy a house before you moved out to Oz or did you just get pre approval? They are saying that we cannot get pre approval and then move out to find a place as our circumstances would have changed.


Sorry Barneybags, didnt see this message. Basically the bank will want to know how you are going to make the mortgage repayments and will want to see you employed so you have regular income. If you tell the bank you are going to be leaving the UK and therefore leaving your job they will not loan you money because you have no way of paying the mortgage. 

Sure, you are going to find a job when you arrive but banks in Australia are very strict and tight on their policy. This strictness on policy is one of the reasons why Australian property prices have done very well throughout the GFC unlike other countries around the world. 

If however you purchase it initially as an investment property then that would be fine. Or, if you have a contract of employment for a new job in Australia then a pre-approval could be based on that.

Hope this helps.


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## Seabee (Jul 15, 2010)

_"not sure whether I will be able to find a place in Oz within budget =240k USD."_

There's very little, if anything, available for that budget. You can check out real estate websites for an idea of prices.


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## cgvaughan (Jul 31, 2010)

Seabee said:


> _"not sure whether I will be able to find a place in Oz within budget =240k USD."_
> 
> There's very little, if anything, available for that budget. You can check out real estate websites for an idea of prices.


Townhouse in south brisbane maybe - small unit on the gold coast - plenty of units for sale in the gold coast at the moment!


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## Seabee (Jul 15, 2010)

lightpanther, unless I've missed it I can't see that you've told us _where_ you want to buy, you've just said Oz...and Oz is a very big diverse place.


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## kaz101 (Nov 29, 2007)

And there are plenty of places to buy for 240K depending on where you are looking


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## amaslam (Sep 25, 2008)

Capital cities: No, maybe Adelaide
2nd and 3rd size cities (second and third largest cities in each state, large towns). Yes

See the Real estate websites (domain and realestate.com.au).



Seabee said:


> _"not sure whether I will be able to find a place in Oz within budget =240k USD."_
> 
> There's very little, if anything, available for that budget. You can check out real estate websites for an idea of prices.


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## Seabee (Jul 15, 2010)

My guess was that it was a major city but the OP hasn't come back to tell us where s/he wants to buy. 

It's for "me and pets" and as very many apartment blocks don't allow pets I'm also guessing a house is necessary.


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