Buying your first home is an exciting milestone, but navigating the financial side of things can be overwhelming. Many first-home buyers start their journey with one big question—how much can we borrow? But the answer isn’t always straightforward, and the right strategy can make all the difference.
In this first home buyer case study, we’ll explore how one Melbourne couple, eager to secure a 2-3 bedroom townhouse in the city’s inner to middle south-eastern suburbs, faced a significant financial hurdle. Initially, they could borrow enough to enter the market, but high Lenders Mortgage Insurance (LMI) costs and borrowing restrictions threatened to derail their plans.
However, with expert mortgage broker advice, they discovered a smarter way to structure their loan—saving over $50,000 in upfront costs and increasing their buying power by $150,000. By strategically using a family guarantee and clearing their HECS debt, they not only avoided unnecessary expenses but also secured a home that would suit them for the long term.
Read on to see how a tailored approach helped them achieve homeownership without compromise.
Client Profile
- First-home buyers looking for a 2-3 bedroom townhouse in Melbourne’s inner to middle south-eastern suburbs
- Two strong incomes and no financial commitments apart from HECS debt
- Over $150K in savings
The Initial Challenge
Like many first-home buyers, the couple’s first question was, “How much can we borrow?” and, more importantly, “What does that mean for the type of property we can buy?”
After reviewing their financial position, the numbers showed that lenders would approve them for a loan of $1.15M to buy a home for $1.225M. This meant their position looked as follows:
| Funds Available | Property Purchase Scenario |
| Savings: $150K | Purchase Price: $1.225M |
| Max Loan Amount: $1.15M | Stamp Duty & Fees: $75K |
| Total Funds Available: $1.30M | Total Cost: $1.30M |
However, there was a major hurdle—with a loan at 93% of the purchase price, Lenders Mortgage Insurance (LMI) of over $50K would apply. Worse still, this would push their total loan-to-value ratio (LVR) beyond 95%, a level that most lenders wouldn’t accept.
At this stage, their home-buying journey could have stalled, or they may have needed to compromise significantly on their property expectations.
The Broker’s Advice: A Strategic Solution
After discussing their options, we explored whether family support could help improve their borrowing position. The couple’s parents were keen to help and offered to provide a security guarantee using their property as additional collateral.
This dropped the loan-to-value ratio to 80%, eliminating the need for LMI and saving them over $50K in upfront costs. The deal now looked workable—but the conversation didn’t stop there.
A Better Long-Term Strategy
As the couple continued their property search, they realised that if they could stretch their budget slightly to around $1.3M–$1.4M, they could secure a home that met their long-term needs. This meant they wouldn’t be forced to move again in less than 5-7 years, avoiding additional selling and buying costs down the track.
But how could they afford the higher purchase price without increasing their financial risk?
We explored several options, but one strategy made the biggest impact—using their savings to clear their HECS debt. By paying off their $80K HECS loan, they were able to increase their borrowing power by $275,000.
This transformed their buying potential, and their new position looked like this:
| Funds Available | Property Purchase Scenario |
| Savings: $70K | Purchase Price: $1.385M |
| Max Loan Amount: $1.4M | Stamp Duty & Fees: $85K |
| Total Funds Available: $1.47M | Total Cost: $1.47M |
With the security guarantee in place, their lending remained at or below 80%, avoiding LMI and unlocking an additional $150K in purchasing power.
The Outcome
Thanks to tailored broker advice, the couple was able to:
âś… Avoid unnecessary LMI costs, saving over $50K
âś… Increase their purchase power by $150K, securing a home that met their needs for the long term
âś… Make a strategic financial move by paying off HECS, which increased their borrowing power significantly
âś… Secure a competitive loan structure with the help of a family guarantee
Instead of settling for a property that may not have suited them long-term, they secured a home that met their needs for at least the next 5-7 years, avoiding the stress and cost of moving too soon.
Key Takeaway: The Right Advice Makes a Difference
This case highlights why working with an experienced mortgage broker is invaluable. A simple “how much can I borrow?” question evolved into a strategic financial discussion that resulted in a far better outcome for the clients—both now and in the future.
If you’re looking to make the most of your home-buying journey, the right advice can help you maximize your budget, avoid unnecessary costs, and make smarter financial decisions.
Thinking of buying your first home? Let’s explore your options. Get in touch today.
