Learn what to avoid and protect your financial future with expert guidance
The biggest mistake first home buyers make is overextending financially by purchasing the maximum amount they can borrow rather than what they can comfortably afford. Other critical mistakes include skipping pre-approval, not getting building inspections, ignoring rate rise impacts, and making large financial changes before applying for a mortgage.
Avoiding these 10 mistakes can save you tens of thousands of dollars and prevent financial stress. This guide covers each mistake, why it's costly, and how to avoid it.
Just because a lender approves you for $600,000 doesn't mean you should borrow that much. Many first home buyers purchase at the absolute limit of their borrowing capacity, leaving no buffer for rate rises, maintenance, or lifestyle changes.
Impact: If rates rise 2%, a $500,000 loan costs $10,000 more annually. If you're already stretched, this becomes unaffordable. Safer approach: borrow 80-85% of what's approved.
Without pre-approval, you don't know your borrowing capacity. This leads to making offers on properties you can't afford, wasting time, and damaging your credit score with multiple credit checks.
Impact: Pre-approval takes 1-2 days and is valid for 3-6 months. It shows sellers you're serious and prevents wasted time. Always get pre-approved before property hunting.
Many first home buyers calculate affordability at current rates (4-5%) but don't consider what happens if rates rise to 6-7%. A 2% rate rise significantly increases your monthly payment.
Example: $500,000 loan at 5% = $2,684/month. At 7% = $3,327/month. That's $643 more monthly. Can you afford this if rates rise?
Many first home buyers don't realise they can buy with just a 5% deposit using government schemes like the First Home Loan Deposit Scheme or First Home Guarantee. WITHOUT paying Lender's Mortgage Insurance (LMI).
Better approach: Use government deposit schemes to buy with 5% deposit and NO LMI. This lets you enter the market sooner instead of waiting 1-2 years to save 20%. Check your state's grants. QLD offers $30,000, NT $50,000, and most states offer stamp duty concessions.
Lenders want to see employment stability. Changing jobs within 3-6 months of applying reduces your chances of approval or may result in lower borrowing capacity.
Strategy: If you're considering a job change, apply for pre-approval first. If you've just changed jobs, wait 6-12 months before applying for a mortgage.
High credit card balances reduce your borrowing capacity and increase your debt-to-income ratio. Lenders assess your total debt obligations, not just the mortgage.
Before applying: Pay down credit cards to 0-30% utilization. This improves your credit score and can increase borrowing capacity by $50,000-$100,000.
A $400 building inspection can reveal $10,000-$50,000+ in repairs (roof, foundation, plumbing, electrical). Skipping inspection is gambling with your investment.
Always get: Professional building inspection before finalizing purchase. It's your last chance to negotiate repairs or walk away. The inspection fee is minimal compared to potential repair costs.
Buying with someone else complicates ownership, selling, and refinancing. If one person wants to sell and the other doesn't, you're stuck. If one defaults, both are liable.
If you must buy together: Use a lawyer to establish clear ownership percentages and exit strategies. Consider whether you could buy alone or wait until you can.
First home buyers often forget about maintenance costs (roof, plumbing, electrical, painting). These costs can be $2,000-$5,000+ annually, especially in older properties.
Budget: Set aside 1-2% of property value annually for maintenance. For a $500,000 property, that's $5,000-$10,000 annually. This prevents financial stress when repairs are needed.
Buying a home is the biggest financial decision most people make. Rushing due to FOMO (fear of missing out) leads to poor decisions. Take time to research, compare, and negotiate.
Better approach: Set a timeline (6-12 months), get pre-approved, research neighborhoods, and view multiple properties. Don't let emotions drive your decision.
Our mortgage brokers will guide you through the home buying process and help you avoid costly mistakes.
Real testimonials from satisfied customers
"Luke helped me get my first home loan. He was extremely helpful throughout the entire process and was on top of everything. Especially as being a first home buyer this was a confusing process but Luke was always available to answer questions I had and was very open and quick to note any changes to my approval process. Thanks heaps Luke. Will definitely use your services again!"
Jake Graceffo
31 Mar 2026