Home buyers

guide
A step by step guide to buying
your first home
Living in
Queensland
Whether you are planning to buy, invest, refinance or renovate – we’re here to help you
every step of the way.

RACQ Bank is different to the big four – we put you before profit. We are here to help
you on your home buying journey and can support you with a range of home loan
options. RACQ Bank’s home loan products offer flexible repayment options, competitive
interest rates, low fees and member benefits.

This guide is designed to help you find your dream home sooner. It’s packed with
expert tips and ideas about saving for a deposit, choosing a home loan that’s right
for your budget and making sure your dream home is fully covered if and when
Queensland’s weather strikes.

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Your home-buying plan
Like any life journey, yours is going to be different. These steps can lead you in the
right direction to owning your first home.

Step 1 Step 2 Step 3

Working out your Choosing the right House hunting like
budget loan for you a pro

Be prepared for costs Find a home loan that Research the property
involved in purchasing suits your lifestyle, market before booking
a home. financial goals and house inspections.
budget.

Step 4 Step 5 Step 6

Buying your home Moving in Managing your loan

Tips for when it’s This is the fun part! Tips for keeping on top
time to transfer the Here’s what you need of your loan repayments
ownership of the to consider before and managing your
property to you. making the big move. finances when life
throws you challenges.

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Step 1.
Working out your Calculating how much you can borrow
Determine how much money you can borrow for a home loan. The amount you can borrow

budget will depend on your:

Saving for a deposit

INCOME SAVINGS EXPENSES BORROWING
A house deposit in Queensland can be typically anywhere from 5% to 20% of the purchase POWER
price, however the greater the deposit you pay, the less money you will need to borrow.
If your loan to value ratio is higher than 80% you may need to pay lender’s mortgage
insurance. Here are some tips to help you save for a deposit. Use our online borrowing power calculator to work out an estimate of how much you can
borrow for a loan. Be accurate and honest with yourself when it comes to expenses as it
will pay off in the long run when you start making repayments. racq.com/borrowing-power

Reduce debt so you can maximise your saving potential.

Knowing what your repayments will be
Know what you will be paying over the term of your loan and have confidence that it’s
Work out where you might need to cut back on your spending. It is within your budget. Use our home loan repayment calculator to forecast your repayments
worthwhile working out your budget based on how much you want to based on the size and type of loan you choose. racq.com/home-loan-repayments
borrow. racq.com/budget-planner

You can save by using a high-interest savings account with automatic

transfers from your salary.

Eligibility for government grants

First Home Owners’ Grant
The First Home Owners’ Grant provides extra help when saving for a deposit. If you haven’t
owned a house before, check out the First Home Owners’ Grant website to see if you’re
eligible to apply. You can apply for this when you apply for your mortgage.
firsthome.gov.au

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Listing your upfront costs
When you’re on a budget it’s worth knowing all the extra costs involved in buying a house to  Transfer registration fees are a one-off fee paid to the Titles
avoid any surprises later on. We’ve got information on some of the most common costs you Transfer Office (State Government) to cover the transfer of the title of
registration fees your new property from the seller to you the buyer.
could end up paying to help you plan in advance.

Registering the mortgage on the title of the property is an

Registration fees additional fee to be aware of and is also payable to the
If you are putting an offer on a house, building and pest should Titles Office.
Building and pest be one of the conditions of the contract. A building inspection
inspections will provide a full report on any structural defects and repairs
required, while a pest inspection checks for any signs of past
or present damage due to pests such as termites. Before Buying a unit, apartment or townhouse usually means being part of
purchasing a home at auction it’s important to organise a a body corporate which handles the management and upkeep of the
building and pest inspection. building and vicinities including pools, gyms and gardens. This incurs a
cost known as body corporate fees. Check with your real estate agent so
you can budget for this cost.
A solicitor or conveyancer is usually engaged by both the
Legal and buyer and the seller to manage the process of transferring
conveyancing fees It is recommended that you review the strata minutes to understand if
the property and ensuring contract obligations are fulfilled. there is any out of cycle contributions or ongoing building work required
Solicitors will also perform other searches and checks as well as and understand the balance of the body corporate fund.
providing advice to sellers and buyers throughout the process –
these services may also result in additional charges.

An establishment fee may be charged to cover costs involved

Bank fees in processing the application and fulfilling the loan through to
funding. This includes credit checks, and administrative costs.
Make sure you research each banks’ fees before submitting
an application.

If you need to borrow more than 80% of the cost of your home,
Lenders Mortgage you’ll need to factor in Lenders Mortgage Insurance (LMI). LMI
Insurance protects your lender from financial loss in the event that you can’t
afford to pay your home loan repayments. LMI can either be paid
upfront or capitilised to the loan.

This is the government tax levied on the purchase of a new

Transfer property and is likely to be the single biggest additional cost
Duty
you’ll need to pay. In Queensland, first home buyers are not
required to pay transfer duty (also known as stamp duty)
if a property they are purchasing is under $500,000.
Concessions apply to properties up to $550,000.
Find out more at qld.gov.au/housing

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Step 2.
Choosing the right Different types of loans
It’s always a good idea to know your interest rate and check if your loan is working for your

loan for you

lifestyle. There are many different types of loans, each with their own advantages and
disadvantages.

> Variable rate

There are many different home loans available to suit your lifestyle, financial goals and
A variable rate will go up and down depending on both internal and external factors.
budget. Here are a few things to consider before choosing a home loan.
The advantage of variable interest rates is that you may benefit from an interest rate drop, which
Interest rate would mean a reduction in the amount of interest you are paying.
A bank will charge you a fee for borrowing money from them - this is called
an interest rate. Your bank will determine their home loan interest rate based > Fixed rate
on several internal and external factors, with the main factor being the cost A fixed interest rate allows you to lock in an interest rate on your loan for one to five years,
of funds, that is, the cost the bank must pay to acquire the money to lend depending on what your bank offers. By having a fixed interest rate, you will be able to know
out. The cost of funds is largely determined by the official cash rate set by what your repayments will be, plan your budget with confidence and secure a rate for a set
the RBA which is reviewed monthly. period of time that works for you.

The disadvantage is you won’t benefit from fluctuating interest rates. With a fixed rate you
Comparison rate are also limited by how much extra you can pay off on your loan, usually this is limited to
A comparison rate helps you work out the true cost of a loan allowing $10,000 per year.
you to compare loans from different lenders. The comparison rate takes
into account the interest rate, loan term, amount of the loan, repayment Towards the end of your fixed term the bank will be in touch to discuss the options for your
frequency plus fees and charges. home loan.

Loan term
Most loan terms are a maximum of 30 years however, if you’re a First Home
Buyer you may be eligible for an extended loan term up to 40 years. A longer Fixed vs Variable
term means smaller repayments, making a first home loan more affordable Fixed Variable
but still allowing you pay your loan off faster when you’re ready to pay more
later on. Not all banks offer an extended loan term, make sure you ask to see
if the option is available.

Interest Rate % APR

(fixed is
cheaper)

Fixed Interest Rate

(variable is cheaper)

Variable Interest Rate

Years

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> Split loans Applying for conditional pre-approval
A split home loan or split mortgage is a home loan arrangement where you can have
both fixed and variable interest rates on your home loan at the same time. This option is Once you have an idea on how much you can borrow, chat to a lending specialist and
viewed as a comfortable compromise between the pros and cons of fixed and variable obtain conditional pre-approval for a home loan. Securing pre-approval is a smart move as
interest rate loans. it clarifies your borrowing power, what you’ll repay and helps you search for a house within
your budget. Pre-approval is free and valid for up to 90 days. This gives you plenty of time
Things to consider when choosing a split loan: and confidence to find your dream first home.
• How much do you want to split between variable and fixed?
• Do the features of both loans suit your personal needs?
• What is the likelihood your personal and financial circumstances will change in the future?
If a bank offers you an introductory rate, make sure you fully understand
> Offset account the terms and conditions of this loan. Some banks offer a really low interest
rate as an introductory rate and then, after the offer period, you will be on a
An offset feature lets you link your transaction
higher rate, make sure to check the comparison rate.
account to your home loan. The funds in
your transaction account are offset against
your home loan balance and you are only
charged interest on the net balance of the two Only pay interest
accounts. What that means is the funds in on $90k
your transaction account work to reduce the
interest charged on your home loan.

Generally, home loans with an offset feature

have a higher interest rate than home loans
that do not have an offset feature. You should
consider the benefits of an offset account
with a slightly higher interest rate compared
to your financial position if you did not have
an offset, and therefore had a home loan with Your Mortgage Your linked accounts
a lower interest rate. $100k Offset Account: $10k

> Principal and interest

A home loan has two parts – the principal and the interest. It’s important to understand the
difference between the two. When borrowing money from a bank, the size of the loan, or
the amount you agreed to pay back, is referred to as the principal. Interest is the amount
the bank is going to charge you for borrowing the principal. For example, if you have a loan
amount of $150,000 with an annual interest rate of 3.19% and repay both principal and
interest monthly over 25 years, then the total interest payable is $67,869.

> Interest only

An interest only loan is when you only pay the bank the interest for the loan, with the
principal balance unchanged during the interest-only period. Interest only is typically
available for investment loans.

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Step 3.
House hunting
like a pro

Style of Home Location Queensland Weather Size Neighbourhood RACQ TIP

What style of property Location is key when Queensland is prone The size of the land, Are you looking for a Check to see how long
do you want? Determine buying a home as it to a variety of weather house and rooms will property in a quiet cul- it’ll take you to get to
whether you are could add to the value of events which could determine whether it’s de-sac where the kids work during peak hour.
planning to buy a unit, your property long term. impact your home. right for you and your can play in the street A lot of inspections are
apartment, townhouse Research if the property Consider whether family. Is there parking or are you looking for a on weekends, when it’s
or house. Then consider is close to schools, your new home available? What direction unit in a high rise close generally quieter, so you
if you are looking to shopping centres, would withstand is the house facing? Do to the city for an easy might be surprised by
buy a previously owned playgrounds, public drought, flooding, fire, you have a big enough commute to work? the travel time needed
home or start fresh and transport, highways and erosion, high and low backyard? Do you need Consider who your during weekday peak
build off the plan. When recreational grounds. temperatures and side access? neighbours are and the hour traffic. You can
buying an existing home, These aspects could sea levels. Go to your noise levels around you. check this by using
you’ll have more options help when the time council’s website to find If your property is next Google Maps or via
to buy closer to the city comes to resell. Check out what weather events to a main road, train RACQ’s annual Red Spot
in an established suburb out your council’s impact your dream station, under a flight Congestion report on
however it’s easier website to see if suburb. You can also path or school you may racq.com/redspot
to find land further there are any planned view flood maps online. find it’s noisy.
from the city in newer developments nearby.
subdivisions.

Customised reports
Research property prices by talking to your bank, attending inspections or talking to a real
estate agent. The Real Estate Institute of Queensland (REIQ) publishes sale prices for houses,
units, townhouses and land by suburb in a quarterly Queensland Market Monitor report. You
can subscribe via reiq.com

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 Your house inspection checklist
When looking for your first or a new home, there are so many things to consider that it can
feel overwhelming. RACQ’s House Inspection Checklist may help you look for things that you
may not have thought of and may help you decide if this is the right property for you.

Drive by – first impressions count. Ensure there is enough storage to

Get a feel for the neighbourhood by meet your needs.
driving around the nearby streets.
Worth doing both during the day How much work and maintenance
and night to see the differences. is needed in the garden.

Make a list of your must-haves and Check the general condition of the
what you are willing to compromise home.
on before viewing a property.
Is the roof in good condition, are
Take a partner, family member of there any missing roof tiles or
friend as an extra set of eyes and damaged fascia or gutters?
someone you can get a second
opinion and bounce ideas off. Does the property have enough off-
street and on-street parking?
Check all fixtures are as you
would expect. Find out what are Check the local traffic during
considered fixtures so you know peak times and whether there is
what the owner will be leaving adequate public transport available.
behind.

Check the plumbing works, water

pressure and look under the sinks
and bathrooms to ensure there is
no leaks or water damage.

Check that the light switches work

and take note of how many power
switches there are and if they are
in convenient locations within each
room.

Check whether there are any signs

of mould/damp.

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Step 4.
Buying your How to make an offer
Once you are ready to buy it’s time to make an offer. Include the relevant conditions for

home
example, building and pest, finance clauses etc. If you’ve got a solicitor or conveyancer, put
down their names on the contract of sale – otherwise you can add these details in later. Once
the contract is signed you will need to pay an initial deposit.

Contract of sale
How to buy a home
When you find your dream property you will need to make your offer in a
As a first-time home buyer, there’s going to be a lot of documents which can be confusing. written contract of sale. This contract will specify all the terms and conditions
Remember, this is a legal process, so everything needs to be ticked and signed to make the and include the settlement date, the deposit amount and the names of the
transaction run smoothly. It’s a good idea to work with professionals you can trust, who can parties selling and buying.
offer guidance when you need it. There are three ways to buy a home.
Paying the deposit
 ou’ll need to pay a deposit to secure your home. This can be paid directly to
Y
the real estate agent office and they’ll hold it until settlement.
1. Buying through a real estate agent or sales representative

In most cases there will be a real estate agent or sales representative If your offer was subject to finance, you need to get your contract through
involved in the marketing and sale of the home you want to buy. The real to your bank within 24 hours of signing to ensure you can meet your
estate agent will be your direct point of contact for the property and condition of finance.
will negotiate privately with the property owner for you. Those who are The bank may want to do a valuation on your new home and you’ll have a set
interested in buying the property submit an application or contract with number of days for the bank to organise this with the real estate agent.
the agent.
Conditional sale
2. Private sale Your contract might be subject to:
 private sale is when the owner decides to sell the property without
A Whether you get finance
the help of a real estate agent. People generally do this to avoid paying
A building and pest inspection
the commission fees. The sale is simply negotiated between a buyer
and a seller directly. It is recommend that you still engage a solicitor for If you can sell your existing property
a private sale.

3 Auction
An auction is a public sale where the highest bidder wins. Auctions can
be very competitive in either an open or closed format. The vendor may
set a reserve price as the minimum sale price for the property- make sure When you sign the contract, you have five business days to change your
you know what your budget is. All properties purchased at auction are mind. Speak to your agent about the cooling-off period available to you.
unconditional, therefore you will need to have completed all inspections Be aware there are costs associated to withdrawing a contract within the
and received conditional loan approval only subject to property valuation cooling off period.
prior to bidding. Visit qld.gov.au and search auctioning a property.

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 Home and Contents Insurance
Home Insurance is usually a requirement of your loan contract and needs
to be established within 24 hours of contract signing. This protects the
fixtures of your property. Contents insurance covers your valuable personal
belongings and can be updated or added when you move into the property.
To find out more about RACQ Home and Contents Insurance, visit
racq.com/homeinsurance

Unconditional
Once you’ve met all the terms of your offer your loan will be unconditional.

Loan documents
 hen your loan documents, arrive, you’ll need to read and sign them
W
all. You will need a Justice of the Peace or solicitor to witness/sign your
mortgage document. If you have any questions about the loan documents
consult your solicitor or conveyancer.

Solicitor/conveyancer
Your solicitor or conveyancer will be working behind the scenes
completing the necessary searches and land title forms the bank requires
prior to settlement. If you have any problems, go straight to them and they
can advocate on your behalf.

Pre-inspection
You can complete a pre-inspection of the house a few days before
settlement. This doesn’t always happen and some people don’t require it.
Just speak to the real estate agent if it’s something you’d like to do.

Settlement
Your contract will state the date your new home settles. Your solicitor and conveyancer
will work directly with the lender to move the funds from the purchaser’s account (yours)
into the sellers. When it comes to settlement there are a few things to cover off.

1. 
On settlement day your bank will follow the direction of the solicitors and transfer
money from your bank account to the sellers solicitors trust account once all the
conditions on the contract have been met.

2. Once the settlement has occurred, you’ll be able to pick up the keys to your new
home from the real-estate agent and start to move in.

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 Managing your
Step 5. Moving in Step 6.
loan
The cost of moving Making your repayments
Moving to a new house can be very expensive – here are some expenses to consider Have the freedom to manage your money your way. Our online banking options make it easier
before moving. to check your balance, transfer funds, make payments and more. Check out all the ways you
can take control of your banking online.
> Removalists or truck hire
> Bond clean for rental
> Australian Post mail redirection
> Utility connections
> New furniture and white goods
> Any minor fixes or professional cleaning required Internet banking Apps PayID Mobile pay

 fter moving you will need to notify family, friends and various organisations of your new
A
address details. You can use the Australian Government website to update your details for
Top up your loan
things like car registeration, drivers’ license, Medicare and Tax Office. Visit australia.gov.au/ Topping up your loan can often be a more cost-effective way to borrow additional funds. So,
information-and-services/family-and-community/change-my-address/queensland if you’re planning renovations, wanting to consolidate your debts or needing extra money,
borrowing funds using your existing home loan could be a good solution to taking out a
separate loan. Talk to your lender about a top-up to see if this is the best option for you.

Redraw money
Here are some tips to make your move nice and easy.
Some home loans have redraw facilities. The benefit of a redraw facility is that you can
1. Prior to moving in is a good time to do any renovations or touch-ups access any payments you’ve made in advance should you need to. This means you can
while there is no furniture in the house. repay more with the flexibility of being able to later access your savings.
2. Move in mid-week to avoid weekend fees and traffic.
3. Reserve parking for removalists. Make extra repayments
4. Draft up a floor plan of where you want the furniture to go in advance to You can make extra payments by increasing your regular repayments or by making an
save time. Plus, removalists may charge by the hour. additional lumpsum repayment.
5. Pre-pack everything with clear labels.
An offset feature lets you link your transaction account to your home loan. The funds in
6. Pack the essentials including keys, remotes, legs for beds and chargers your transaction account are offset against your home loan balance and you are only
in an easy to access box. charged interest on the net balance of the two accounts.
7. Ask friends and family to give you a hand.

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Why bank Glossary
with us? Comparison rate A Comparison Rate is an interest rate that indicates the true
cost of a loan. This rate incorporates most fees and charges
that are applicable for the chosen product, and also takes into
account what the interest rate will be after any introductory
Queenslanders looking for a true alternative to the big 4, now have an opportunity to be a periods are finished.
member of RACQ Bank. We are a bank owned by members, to benefit members.

RACQ has long been an integral part of Queensland and launching RACQ Bank allows us to Lenders Mortgage Lenders Mortgage Insurance (LMI) is a one-off insurance
provide a range of straightforward banking products, all backed by our 24/7 Queensland Insurance (LMI) payment which banks generally require you to pay if you have a
service and technology to help you bank on the go. smaller deposit.

Loan to Value Ratio The Loan to Value Ratio (LVR) is the amount you are borrowing
(LVR): represented as a percentage of the value of the property being
used as security for the loan. Our maximum LVR on home loans
is 80%. However, with Lenders Mortgage Insurance (LMI), LVR for
Owner Occupiers and Investors up to 90% can be considered.

Offset account An offset feature lets you link your transaction account to your
home loan. The funds in your transaction account are offset
against your home loan balance and you are only charged
interest on the net balance of the two accounts.

Redraw facility If you pay an extra amount into your loan you may redraw that
money at a later time if you need.

The information in this article has been prepared for general information purposes only and not as specific advice to any
particular person. Any advice contained in the document is general advice and does not take into account any person’s
particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should
consider its appropriateness to you, having regard to your objectives, financial situations and needs. You should obtain and
consider the Product Disclosure Statement or terms and conditions relating to the products mentioned, before deciding
whether to acquire any products.
Banking and loan products issued by Members Banking Group Limited ABN 83 087 651 054 AFSL/Australian credit licence
241195 trading as RACQ Bank. Terms, conditions, fees, charges and lending policies apply. This information does not take
your personal objectives, circumstances or needs into account. Read the disclosure documents for your selected product or
service, including the Financial Services Guide and the Terms and Conditions, before deciding.
Except for RACQ Bank, any RACQ entity referred to on this page is not an authorised deposit-taking institution for the purposes
of the Banking Act 1959 (Cth). That entity’s obligations do not represent deposits or other liabilities of RACQ Bank. RACQ Bank
does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.
Insurance products are issued by RACQ Insurance Limited ABN 50 009 704 152 (RACQ). Conditions, limits and exclusions apply.
Please read the PDS and any relevant SPDS (where applicable) before making a purchase decision on this product. Any
general advice relating to this product at racq.com is provided by RACQ.
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 13 1905 > racq.com/bank

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