First Home Buyer’s Guide to Buying Property in Victoria

Buying your first home in Victoria is a sequence of decisions, most of which happen before you ever see a contract. This guide walks through the process in the order it actually occurs — from finance to settlement day — and flags where first home buyers most often lose money or sleep.

1. Sort your finance before you start looking

A formal pre-approval tells you what you can spend and, just as importantly, what conditions the lender will attach. Pre-approval is not a guarantee: the lender still values the specific property and can decline it if the valuation comes in low or the building is on a lender’s exclusion list (some apartment developments and small lots are). Budget for lender’s mortgage insurance if your deposit is under 20%, and ask whether you qualify for the Commonwealth Home Guarantee, which allows eligible first home buyers to purchase with a 5% deposit and no LMI. Eligibility rules and property price caps change, so confirm current settings with your broker or Housing Australia.

2. Know what government help applies to you

Victoria offers first home buyers a stamp duty exemption or concession on their principal place of residence, and a First Home Owner Grant on new homes. The thresholds, the definition of “new”, the residency requirement (you must live in the property for a continuous period after settlement) and the temporary off-the-plan concession all have fine print that decides whether you qualify. Two common traps: buying with a partner who has owned property before, which can affect eligibility, and assuming a renovated property is “new” — it usually is not. Check the State Revenue Office calculators before you make an offer, not after.

3. Read the Section 32 before you fall in love with the house

The vendor’s statement — the Section 32 — discloses title, mortgages, easements, covenants, planning zoning, owners corporation details, building permits from the last seven years and any notices affecting the land. It is where you find out that the garage was built without a permit, that the backyard has a drainage easement running through it, or that the apartment building is facing a special levy. Have it reviewed before you sign anything or bid at auction. It costs far less than the problem it prevents.

4. Understand the contract you are signing

Victorian contracts of sale are heavily standardised, but the special conditions are where vendors’ lawyers earn their keep. Watch for conditions that limit your ability to rely on the building inspection, that release the deposit early to the vendor, that shorten the time to raise requisitions, or that allow the vendor to rescind if a planning issue emerges. If you need finance, a “subject to finance” condition must be drafted properly — with a realistic date and a clear mechanism for ending the contract — or it gives you no protection at all.

5. Cooling-off: what it does and does not cover

For a private sale of residential property in Victoria you generally have three clear business days after signing to cool off, forfeiting $100 or 0.2% of the price, whichever is greater. There is no cooling-off at auction, or if you buy within three clear business days before or after a publicly advertised auction, or if you have already obtained legal advice on the contract. Do not treat cooling-off as a substitute for due diligence — three days is not enough to get a building inspection and a full contract review done properly.

6. Building and pest inspection

Order one for every established house you are serious about, and read the report rather than the summary. For apartments, the owners corporation records — minutes, financial statements, insurance and maintenance plans — are the equivalent inspection. A cheap report that skips the roof cavity or subfloor is not a saving.

7. What your conveyancer actually does

• Reviews the Section 32 and contract, and negotiates special conditions before you sign.
• Orders and reviews certificates and searches (title, planning, water, land tax, owners corporation, VicRoads and others as needed).
• Prepares the transfer, stamp duty documents and first home buyer concession applications.
• Calculates adjustments for rates, water and owners corporation fees so you pay only for your period of ownership.
• Coordinates settlement with your lender and the vendor’s representative through PEXA, the electronic settlement platform.
• Lodges the transfer so the title is registered in your name.

Ask any firm to set out its professional fees and the likely disbursements in writing before you engage them. See our guide to conveyancing costs in Victoria for what to expect.

8. Between signing and settlement

Arrange building insurance from the day you sign — in Victoria the risk generally passes to the purchaser at settlement, but lenders usually require cover earlier and it is prudent regardless. Do a final inspection in the week before settlement to confirm the property is in the same condition as when you bought it and that included chattels are still there. Tell your conveyancer immediately if something is wrong; after settlement your leverage largely disappears.

9. Settlement day

Settlement now happens electronically. Your lender releases funds, the vendor’s mortgage is discharged, stamp duty is paid, and the transfer is lodged — usually within an hour, without anyone leaving their desk. You collect the keys from the agent once the vendor’s representative confirms settlement has completed. If settlement is delayed by the other side, penalty interest is usually payable under the contract; if it is delayed by your lender, it is you who pays it, which is why your finance needs to be unconditional well before the settlement date.

Empower Legal Solutions acts for first home buyers across Melbourne. We disclose our pricing before you engage us and read every contract properly before you sign it. Book a free first consultation or read more about our conveyancing service.

Frequently asked questions