First home buyer mistakes to avoid

Buying your first home is exciting, but a few common missteps can turn that excitement into financial stress. Most of these mistakes are avoidable once you know what to look out for. Here are the ones we see most often, and how to sidestep each.

Over-stretching with no buffer

It's tempting to borrow right up to your limit, especially in a competitive market. The problem is that leaves no room for rate rises, unexpected bills or a change in income.

• Aim to keep some buffer in your budget rather than stretching every dollar of borrowing capacity.
• Build a small emergency fund before or shortly after settlement, rather than relying on the loan itself.
• Ask your broker to stress-test your repayments against a higher interest rate, not just today's rate.

Skipping pre-approval

Some buyers start inspecting properties, or even bidding at auction, before they know what they can actually borrow.

• Pre-approval gives you a realistic budget and shows agents and vendors you're a serious buyer.
• It can also surface issues early, such as a credit file item or documentation gap, while there's still time to sort them out.
• Pre-approval isn't a guarantee of final approval, but it's a much stronger starting point than guessing.

Changing jobs mid-application

Lenders assess your income and how secure it looks, so a job change between applying and settlement can put your approval at risk, even when the new role pays more.

• Where you can, avoid switching employers, moving from full-time to contract, or starting a business between applying and settling.
• A new role often comes with a probation period, and some lenders won't count probationary income, which can shrink your borrowing power at the worst possible moment.
• If a change is unavoidable, tell your broker before you resign, so we can check how your lender will treat it.

Ignoring available concessions and schemes

First-home buyers often qualify for support they don't realise exists.

• Stamp duty concessions or exemptions in most states, specifically for first-home buyers.
• The 5% Deposit Scheme (formerly the First Home Guarantee), which can allow a deposit as low as 5% with no LMI, subject to property price caps.
• Help to Buy, a shared-equity scheme that can get you in with as little as a 2% deposit by giving the government an equity share.
• The First Home Super Saver scheme, which can help boost a deposit using voluntary super contributions.

Missing out on these isn't usually deliberate. The rules and thresholds change often and are easy to overlook without someone checking your specific situation.

Forgetting the full cost of ownership

The purchase price and deposit are only part of the picture; our property purchase costs calculator adds up the rest before you commit.

• Budget for stamp duty, LMI (if applicable), legal fees, building and/or strata inspections and loan fees before you commit, not after.
• Factor in moving costs, connection fees and the first few months of unexpected expenses that come with any new home.
• Plan for ongoing costs too: council rates, insurance, maintenance and, for many first-home buyers, a mortgage that's principal and interest from day one.

Running your savings down before settlement

The money needs to actually be there on settlement day, not just when you were pre-approved. Spending your savings down in between is a common way a purchase comes unstuck late.

• Keep your deposit and completion funds intact: settlement needs your deposit plus stamp duty, legal fees and the other costs, all available on the day.
• Hold off on big-ticket buys like a car, furniture or a holiday until after you've settled, since they can eat into the cash you need or add new debt to your application.
• Some lenders re-check your finances close to settlement, so a sudden drop in savings or a new liability can hold things up.

Frequently asked questions