Buying a property is one of the biggest financial decisions you’ll ever make. Whether you’re a first-home buyer or adding to an investment portfolio, walking in prepared makes all the difference. Here are the key questions you should be asking, and getting answered, before you sign anything.
Topics in this article:
1. What is my true borrowing capacity?
Pre-approval figures can be flattering. Your actual borrowing capacity depends on your income, existing debts, living expenses, and the lender’s stress-test rate (currently calculated at 3% above the loan rate in Australia). Ask your mortgage broker or financial planner to model your repayments at higher interest rate scenarios, not just today’s rate.
2. How much do I actually need saved?
The deposit is just the beginning. Factor in stamp duty (which varies by state and whether you’re a first-home buyer), lender’s mortgage insurance (LMI) if borrowing above 80% LVR, conveyancing fees, building and pest inspections, and moving costs. A good rule of thumb is to budget an extra 5% of the purchase price on top of your deposit.
3. Is this the right structure for me to buy in?
Should you buy in your own name, jointly with a partner, through a trust, or via a self-managed super fund (SMSF)? Each option has different tax, asset protection, and estate planning implications. This is worth a specific conversation with both your financial planner and your accountant, if you have one, before you make an offer.
4. How will this affect my cash flow month to month?
Run the numbers on your monthly mortgage repayments, council rates, strata fees (if applicable), landlord insurance, and property management fees if it’s an investment. Then ask, “Can I comfortably cover this if rates rise by 1–2%?” If the answer involves sacrificing an emergency fund, that’s a risk to address first.
5. What does the rental yield look like, and is capital growth realistic?
For investment properties, both yield and capital growth matter. Gross rental yield gives you a quick comparison across suburbs, but net yield (after all costs) tells the real story. Research comparable sales and rental demand in the area and be wary of any projections that seem unusually optimistic.
6. Are there any hidden costs with this specific property?
Ask the selling agent for the body corporate’s or owners’ corporation’s records if it’s a unit or townhouse. Look for upcoming special levies, deferred maintenance, or a sinking fund that’s running low. For houses, a building and pest inspection is non-negotiable even in a competitive market.
7. What are my exit options?
Good investors think about the exit before they buy. How liquid is this market if you need to sell quickly? Is the property likely to appeal to a broad range of buyers, or is it highly niche? Understanding your exit options helps you make a calmer buying decision.
8. How does this fit into my overall financial plan?
A property purchase should be considered in the context of your other financial goals, whether that be retirement savings, superannuation contributions, debt reduction, or emergency reserves. Ask your financial planner, “Does this move me closer to my goals, or does it crowd them out?”
9. What government grants or concessions am I eligible for?
First-home buyers in Australia may be eligible for a number of different schemes. This includes the First Home Owner Grant (FHOG), the First Home Guarantee scheme (5% deposit, no LMI), stamp duty concessions, and the Help to Buy shared equity scheme. Eligibility varies by state and purchase price, so confirm what applies to you before assuming anything.
10. Do I have the right professional team around me?
You don’t have to navigate this alone. A good buyer’s team typically includes a mortgage broker, financial planner, conveyancer or solicitor, accountant, and potentially a buyer’s agent. Cutting corners here often costs more in the long run than the fees you save.
