For first home buyers in 2025, securing a mortgage isn’t just about having a deposit and a job—it’s about convincing a lender that you’re a safe and responsible borrower.
Lenders are in the business of risk management. They assess every applicant not just on income and savings, but also on your behaviour with money. In fact, the way you manage your day-to-day finances can tell lenders more about your suitability for a home loan than your salary figure.
Unfortunately, many first home buyers unintentionally sabotage their application by displaying warning signs—red flags—that raise doubts about their ability to repay a loan.
Here are seven of the biggest red flags that can hurt your chances of getting approved and the broader concern they point to: an inability to manage money.
1. Too Many Credit Enquiries
Every time you apply for a credit card, a car loan, or even a phone plan, a “credit enquiry” is recorded on your credit file. Too many of these in a short timeframe is a serious red flag.
To a lender, this suggests financial desperation, poor planning, or both—even if the applications were just for comparison or never progressed.
The Fix: Don’t apply for multiple forms of credit while preparing for a home loan. Speak with a mortgage broker who can assess your options without affecting your credit score, and only lodge a loan application with one lender (2 at most) when you’re confident it’s the right lender and you will be approved.
2. Overdrawn Bank Accounts
Lenders often require your bank statements. Overdrawn accounts—especially repeatedly—signal to lenders that you’re not tracking your spending or worse that you are living beyond your means.
It raises the question: If you’re struggling now, what will happen when you add a mortgage and property expenses to the mix?
The Fix: Keep your transaction account in the black. Set up alerts for low balances, ensure you have an emergency buffer, and get in the habit of leaving funds in the account to cover upcoming bills.
3. Not Staying Below Credit Card Limits
It’s not just about whether you’re making repayments—lenders also look at how much of your limit you’re using. Sitting close to your credit limit month after month suggests a reliance on credit rather than a well-managed cash flow.
Consistently maxed-out cards make lenders nervous—even if you’ve never missed a payment.
Going over the limit on your cards is even more detrimental to your chances of getting a loan. Its a line you need to avoid crossing.
The Fix: Use less than 30% of your credit limit, and aim to pay more than the minimum due each month. Better still, pay your balance in full if you can. And if you have cards you don’t use, cancel or reduce the limit to improve your borrowing capacity.
4. Missed or Dishonoured Payments
Whether it’s a car loan, buy-now-pay-later account, or your mobile bill—missed payments or dishonoured direct debits are a red flag. Lenders see them as signs of disorganisation or financial stress.
Even one missed payment in the three to six months before your application can affect your approval chances, especially with stricter lender policies in 2025.
The Fix: Set up automatic payments for recurring bills. Review your direct debits regularly to ensure funds are available on due dates. If you do miss a payment, catch it up quickly and avoid repeat occurrences.
5. Gambling Transactions
This is a sensitive topic, but it’s important to be clear: visible gambling activity on your statements can hurt your application. The occasional punt is fine but regular Sportsbet or Ladbrokes spending OR ATM withdrawals at Crown Casino or Flemington raises red flags, most lenders see it as a sign of risky financial behaviour—that might impact your ability to make loan repayments.
Some lenders will flatly decline an application with visible gambling, especially if paired with any other red flags.
The Fix: If you enjoy gambling, keep it completely separate from your primary bank accounts—or ideally pause all activity for a few months before applying. This shows lenders a more disciplined financial picture.
6. No Savings (or Savings Going Backwards)
Lenders want to see that you can consistently save, not just receive lump sums from bonuses or gifts. A lack of regular saving—or worse, watching your savings decline—signals poor money management or living beyond your means.
The Fix: Build a simple savings habit. Even a small monthly contribution shows consistency. If your savings are dipping, reassess your expenses. A solid three to six months of upward savings history can make a big difference.
7. Undeclared Financial Commitments
Hiding a car loan, forgetting about HECS, or not disclosing credit cards can backfire. Lenders will usually discover these anyway through your credit file and bank statements—and if you’ve withheld information, it damages your credibility.
Worse, it raises the question: What else aren’t they telling us?
The Fix: Disclose all your commitments upfront, even if you think they’re minor. A broker can help you work out what needs to be declared and how to frame it properly.
What These Red Flags Really Say About You
Each of these behaviours—credit enquiries, overdrawn accounts, maxed-out cards, missed payments, visible gambling, backwards savings, and hidden debts—tells a story.
And the story they tell is this: This borrower doesn’t manage their money well.
That’s what lenders are trying to uncover—not just whether you earn enough, but whether you have the habits and discipline to consistently meet repayments for the next 20–30 years.
The Bottom Line: Get Ahead by Getting Organised
The good news? These red flags aren’t permanent. With a few months of consistent, responsible financial behaviour, you can turn around your application and present yourself as the reliable borrower lenders want to work with.
Working with a mortgage broker means you don’t have to guess what’s acceptable—we know what lenders look for, and we’ll help you strengthen your application before it’s submitted.
At Hatch Financial Services, we help first home buyers prepare, plan, and get approved—without the stress or second-guessing.
Need advice? Let’s hatch a plan that gets you into your first home, sooner.
