Australia officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania and numerous smaller islands in the Indian and Pacific Oceans.

Permission: The ability of a foreign national to make the purchase of property in Australia requires governmental permission. Before a foreign national can commence seriously the pursuit of real estate to purchase in Australia, he or she must seek and obtain permission to purchase real estate from the Foreign Investment Review Board.

Whatever type of property a person is seeking to purchase residential or investment property, it is important to start the approval process with the Foreign Investment Review Board early. Indeed, most people apply for approval from the Board at least ninety days prior to launching a more concentrated search for property in Australia.

When it comes to a foreign national investing in residential or commercial property in Australia, getting approval from the Foreign Investment Review Board really is the most cumbersome part of the entire process. Once this approval has been obtained from the governing Board, the process of satisfying the legal requirements to purchase and own real estate in Australia surprisingly is rather simplistic.

Finding a Property: Most property in Australia is sold either through what is known as a conventional channel or through auctions. In considering the conventional course of purchasing property in Australia, when a foreign national identifies a property that he/she is interested in buying, he/she need only make an offer to the seller.

Be informed about the services offered by estate agents, solicitors, conveyancers, loan providers and mortgage brokers. Shop around as much as you can for the best deal and quality of service.

The Process: The initial offer can be verbal or in writing. Once received by the seller, the seller will either accept or reject the offer that has been made. In many instances, if the offer is not at the price the seller has set for the property, the seller may make a counter offer. In any event, if an offer (or counter offer) is accepted, a Contract for Sale will then be drafted.

If you plan to get a building report, building inspections range from $250 to more than $2000, depending on the property size.

After the acceptance of the final agreed offer, the buyer is obliged to make what is known as a holding deposit. Generally speaking, the holding deposit is 10% of the total price agreed upon for the sale of the property in question. During the period of time in which the Contract for Sale is being prepared and drafted, a buyer or seller maintain the ability to back out of the transaction. If this occurs, more often than not, the buyer is entitled to a refund of the entire holding deposit.

Once the terms and conditions of the Contract for Sale fully are hammered out, the parties to the sale will sign the sale agreement. The Contract for Sale sets forth all of the conditions, restrictions and requirements that must be satisfied in advance of the ultimate and final sale and conveyance of the property. The primary conditions generally are the buyer obtaining financing and the seller making certain that there are no encumbrances on the real estate that would preclude its transfer to a new owner.

In most Australian states, once the Contract for Sale is made and the deposit paid by the buyer it becomes irrevocable. In other words, the buyer can't get his/her deposit money back. However, in some Australian states there is a ten day "cooling off period" following the execution of a contract for sale. Within this time period, if the seller decides to back out of the contract, he/she can do so without losing the security deposit. There may be some financial penalty to backing out of the deal, but the majority of the initial deposit will be refunded.

At this stage, the parties merely wait for the final wrap up of the obligations under the contract for sale that each party assumes pursuant to that agreement.

The seller obtains appropriate financing in most instances and the buyer makes certain that the property is in proper for sale both physically and legally.

During the buying and selling process you may come across several types of contracts such as loan agreements, authorities to sell, authority to act as mortgage broker on your behalf, contract notes and contracts of sale of real estate.

Refuse to be hurried into a decision; you will be paying off your loan for decades to come and you will want to make sure you have chosen the right property.

Take your time, READ EVERYTHING before you sign it, and make sure you fully understand its contents including all terms, conditions and fine print. Ask questions about anything unclear. If the explanation provided is still not enough, ask for professional legal advice.

Solicitors: Although using a solicitor is not a legal requirement in order to buy a property in Australia, it certainly is worth the peace of mind knowing that you have covered all aspects of the legalities involved.

Legal fees; If you employ a solicitor, conveyancer or estate agent for performing the legal transfer of ownership, the fees are between $600 and $800 for an average priced home; alternatively, you can purchase a do-it-yourself kit.

Loans/Mortgages: You can consider raising finance on your existing property in the UK to cover the whole cost of your Australian purchase. This can be a good idea if the interest rate in Australia is a lot higher than it is here in the UK as you will pay a lot less in monthly repayments

You can consider taking out a mortgage against the property from a local bank in Australia. This can be a wise option especially if the interest rate is lower than our current UK interest rate. Most Australian mortgage lenders will require up to 30% deposit on mortgages. However, you will need to give some thought to how you will service your mortgage payments each month especially if you are not living or earning in that country as you may well lose out on exchanging money each time to cover monthly expenses.

Some Builders and developers may well offer their own mortgage facilities on their properties for sale. This can be beneficial to both parties depending on the logistics of the mortgage or loan facility. Always check and compare with the two options above before making your final decision

Loan establishment fees; Australian lenders usually charge a one-off establishment fee on new home loans; the fees range between $600 and $1000.

Insurance; If you are looking to borrow more than 80% of the value of the property, your lender will most likely require you take out mortgage insurance. NB: this insurance covers the lender, not the buyer, in case of payment default. You would do well to consider an income protection plan as well.

Taxes: Stamp duty is charged in all states on the loan amount and the price of the property. Stamp duty may vary due to the location and price of the property, but can add up to 5% to your overall expenses.

Total Costs: When deciding upon how much you can afford to spend on a property, you should keep in mind not only the deposit, the loan amount (even if it is a 100% loan) or the interest rate, but also:legal fees, loan establishment fees, mortgage insurance, stamp duty, property inspection fees.

When added to the required deposit, all these expenses can amount to a fairly sizeable sum, and most borrowers are shocked at the financial commitment required. On a mortgage loan of $300,000, expect to pay approximately $15,000 in fees. With mortgage insurance, this could rise to about $20,000.

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Disclaimer: This guide is for information only and should not be relied upon as definitive. Details have been obtained from various sources and although we have done everything possible to ensure that it is correct, we cannot accept responsibility for it or guarantee its accuracy. This is because processes and laws change frequently, and may also vary dependant upon personal circumstances. You are welcome to use the information provided, but should always obtain confirmation of specific details and get independent specialist and legal advice in the country that the information refers to.

08-02-2011