Buying your first home is often framed as a financial milestone, but in practice, it feels more like a crash course under pressure, where you are expected to understand lending, contracts, suburbs, negotiation, and financial management. This probably leaves you asking the question why didn’t I learn this at school? Well, let’s help you get ready for your first home and help point out some often-overlooked problems when getting into the property market.
Most first-home buyers spend months focusing on the obvious things. How much deposit do they need? What suburbs can they afford? Whether prices are going up or down. Those questions obviously matter, but they are rarely the ones that cause people to stumble. The problems tend to come from the details that sit just outside the spotlight, the ones you only notice after you have already made a full-on commitment.
The True Cost of Buying Extends Well Beyond the Deposit
Many first-home buyers assume that once they’ve saved a 20% deposit, they’re in the strongest position possible. While a larger deposit certainly helps you avoid Lenders Mortgage Insurance (LMI), focusing solely on deposit size can lead to other financial vulnerabilities.
It’s important to be mindful of your savings not being completely depleted by your deposit. Lenders want to see that you’ll have genuine savings remaining after settlement, demonstrating you can handle mortgage repayments alongside unexpected expenses. A general rule of thumb is to retain at least three to six months’ worth of living expenses in accessible savings.
Additionally, some buyers delay their purchase for years, trying to reach that 20% threshold, potentially missing out on market opportunities or government incentives. With schemes like the First Home Guarantee, eligible buyers can enter the market with as little as 5% deposit without paying LMI. The key is finding the right balance for your circumstances rather than fixating on a single magic number.
Location Research Goes Beyond the Suburb
Most first-home buyers research suburbs thoroughly, comparing median prices, proximity to work, and local amenities. However, they often overlook micro-location factors that significantly impact both liveability and future resale value.
Within any suburb, there can be substantial variation in desirability. Properties on busy roads, near industrial zones, or under flight paths may be cheaper initially but harder to sell later. Conversely, homes near parks, good schools, or in tree-lined streets typically hold their value better, even if they cost slightly more upfront.
Zoning is another frequently overlooked consideration. Check your local council’s planning scheme to understand what can be built nearby. That vacant block next door could become a high-rise apartment building, significantly affecting your sunlight, privacy, and property value. Similarly, future infrastructure projects, both positive (new train stations) and negative (planned freeways), can dramatically impact your investment.
Understanding Your Borrowing Capacity vs Comfort
Getting pre-approved for a loan gives you a maximum borrowing amount, but this figure represents the most a lender believes you can service, not necessarily what you should borrow. Banks assess your ability to repay based on your current income and expenses, but they don’t account for your lifestyle goals or future plans.
Consider how your circumstances might change over the next few years. Are you planning to start a family, which might involve reduced income or increased childcare costs? Do you want to travel regularly or pursue expensive hobbies? Your mortgage should fit comfortably within your budget while still allowing you to live the life you want. Run realistic scenarios using mortgage calculators that account for interest rate rises. If rates increased by 2-3%, could you still afford the repayments? This stress-testing approach helps ensure you’re not stretching yourself too thin based on historically low rates that may not last.
Interest Rate and Loan Structure
Many first-home buyers focus exclusively on getting the lowest interest rate. You probably think this is wise, but the loan structure and features matter just as much as the rate itself. A loan that’s 0.1% cheaper but lacks essential features or has restrictive conditions may end up costing you more in the long run. Always read the fine print.
Consider whether you want a fixed or variable rate, or a split loan combining both.
Fixed rates: they provide repayment certainty and protection against rate rises for the fixed period, but they typically don’t allow additional repayments and can incur break fees if you want to refinance early.
Variable rates: they offer flexibility but expose you to rate fluctuations.
Look for features that align with your goals, such as offset accounts (which can significantly reduce interest paid over the life of the loan), redraw facilities and the ability to make extra repayments. Some lenders also offer portability, allowing you to transfer your loan to a new property without refinancing, which can be valuable if you plan to upgrade in the future.
Guidance Early Can Prevent Expensive Mistakes
One of the most overlooked steps in the process is getting advice early, before inspections turn into offers and excitement overrides planning. Many first-home buyers find it helpful to speak with local experts, like say a mortgage broker from Moonee Ponds, who can help buyers understand their options, identify constraints early and structure finance in a way that supports long-term stability rather than short-term urgency.
Good advice does not remove or completely eliminate risk, but it helps you understand it before you are standing in a driveway trying to make a snap decision in real time.
Taking the Next Step With Confidence
Buying your first home can be overwhelming, but hopefully, by understanding these aspects, you can navigate the tricky process with a bit more confidence. Remember, this is achievable if you take the right steps and back yourself. Take the time to educate yourself, ask questions, and seek professional advice when needed. The property market will always have challenges, but being aware of the pitfalls.
