We help lots of First Home Buyers so we are really familiar with the excitement that comes with this milestone along with the trepidation and challenges faced. We also see a pattern of the common traps that First Home Buyers need help to navigate and in doing avoid the financial strain, unnecessary stress, or missed opportunities. To help you navigate your journey with confidence, we’ve outlined the top five mistakes first home buyers make—and how you can avoid them.
1. Overextending Your Budget
A major pitfall for first home buyers to avoid is stretching their finances too thin by committing to a property beyond their means. While lenders may approve you for a sizeable loan, it’s essential to consider your ability to comfortably manage repayments—especially with potential that interest rates might always go up.
How to Avoid This Mistake:
✅ Set a Realistic Budget: Consider your income, living expenses, and future financial goals, including savings, investments, and potential life changes (such as starting a family or career shifts).
✅ Factor in Interest Rate Increases: With economic conditions changing, be prepared for potential rate rises. Use online mortgage calculators to test different repayment scenarios.
✅ Stick to Your Budget—Even If You’re Approved for More: Just because a bank offers you a higher loan amount doesn’t mean you should take it. Borrowing less than your maximum capacity provides financial breathing room.
Tip: Consider speaking with a mortgage broker who can help to work out how much you are comfortable with borrowing while ensuring it aligns with your long-term financial health.
2. Underestimating Additional Costs
Many first home buyers focus solely on the purchase price, only to be caught off guard by the hidden costs of homeownership. Beyond your deposit, there are additional expenses that can quickly add up.
Common Extra Costs to Consider:
Stamp Duty: A significant cost in most states, though first home buyers may be eligible for concessions or exemptions. Check your state government’s website for the latest first home buyer grants and discounts.
Legal and Conveyancing Fees: A solicitor or conveyancer is essential to ensure a smooth property transaction, costing anywhere from $1,000 to $3,000.
Building & Pest Inspections: While optional, these inspections can uncover serious structural issues or pest infestations, potentially saving you thousands in future repairs.
Moving Costs: Hiring professional movers, renting a truck, or even purchasing new furniture and appliances can be expensive.
Utility Connections & Council Rates: Many first-time buyers forget about upfront costs for electricity, water, and internet connections, as well as ongoing council rates and strata fees (if buying an apartment).
How to Avoid This Mistake:
✅ Research all potential expenses and build a buffer into your budget. Aim to set aside at least 6% of the purchase price for additional costs (it can be less if you qualify for a Stamp Duty waiver/reduction).
✅ Use online stamp duty calculators specific to your state to estimate your upfront expenses.
✅ Seek professional guidance to understand all costs before making an offer.
Tip: Check what government grants, programs or incentives you are eligible for such as the First Home Owner Grant (FHOG), First Home Guarantee or First Home Buyer Assistance Scheme in your state. These can help offset costs.
3. Skipping Mortgage Pre-Approval
Many first home buyers excitedly jump into house hunting without securing a mortgage pre-approval, only to be disappointed when they find the perfect home but can’t secure financing in time.
Why Mortgage Pre-Approval is Important:
Confirms Your Borrowing Power: Pre-approval provides a clear understanding of how much you can borrow, preventing wasted time on properties outside your budget.
Strengthens Your Position as a Buyer: Sellers take pre-approved buyers more seriously, giving you an advantage in negotiations.
Speeds Up the Buying Process: Once you find the right home, having pre-approval in place makes the final approval process quicker and smoother.
How to Avoid This Mistake:
✅ Get pre-approved before you start house hunting. This way, you know your borrowing limit and can make informed decisions.
✅ Compare different lenders or work with a mortgage broker. Brokers can help you find competitive loan options suited to your situation and then arrange the pre-approval allowing you to focus on finding the right home.
Tip: Be mindful that pre-approvals typically last 3-6 months. If your financial situation changes (e.g., new job, major expenses), you may need to update your pre-approval.
4. Neglecting Property Inspections
In a competitive property market, some buyers may feel pressured to skip building and pest inspections to speed up the process. However, this can be a costly mistake, as hidden issues may not be immediately visible.
Potential Risks of Skipping Inspections:
Structural Defects: Cracks in foundations, poor-quality renovations, or water damage can lead to expensive repairs.
Pest Infestations: Termites and other pests can cause severe damage to a home’s structure.
Asbestos & Mould Issues: Older properties may contain hazardous materials requiring costly removal.
How to Avoid This Mistake:
✅ Invest in professional building and pest inspections before signing contracts. These reports typically cost $300-$700 but can save you thousands in repair costs.
✅ Negotiate repairs or price reductions based on inspection findings.
✅ Avoid ‘as-is’ purchases without due diligence. If a seller discourages inspections, consider it a red flag.
Tip: Request inspection reports from the seller if available, but always conduct your own independent assessment for peace of mind.
5. Letting Emotions Drive Decisions
Buying your first home is an emotional journey, but getting too attached to a property can lead to costly mistakes—such as overpaying or overlooking practical considerations.
Common Emotional Traps:
Falling in Love Too Quickly: Buyers who become emotionally invested may ignore flaws or financial red flags.
Fear of Missing Out (FOMO): Rushing into a purchase due to market hype or pressure from sellers can lead to regrettable decisions about the purchase made or the price paid.
Ignoring Long-Term Needs: Choosing a home based on current desires rather than long-term suitability (e.g., location, future family plans, job changes). The costs to transact property are high so the less often you need to sell and buy a new home the better off you are. Ideally a purchase should be made with a 5-10 year horizon…even better if the place can suit your needs for longer.
How to Avoid This Mistake:
✅ Define Your Must-Have Features and Stick to Them. Make a list of non-negotiables before starting your search.
✅ Take a Step Back Before Making an Offer. View multiple properties, compare options, and avoid impulse decisions.
✅ Think Long-Term. Consider factors like proximity to schools, transport, and potential property value growth.
Tip: If unsure, seek advice from a buyer’s agent or trusted mentor who can provide an objective perspective.
Final Thoughts
Buying your first home in Australia is an exciting milestone, but it’s essential to approach the process with knowledge and careful planning. By avoiding these common mistakes and taking proactive steps, you can make a well-informed decision that supports your long-term financial success and lifestyle goals.
Key Takeaways:
✔ Set a realistic budget and prepare for interest rate fluctuations.
✔ Account for additional costs beyond the purchase price.
✔ Secure mortgage pre-approval before starting your property search.
✔ Never skip property inspections, no matter how tempting it may seem.
✔ Make decisions based on logic and long-term benefits—not emotions.
If you need expert guidance on securing the right home loan, speak to a mortgage broker who can help you navigate the process with ease. Happy house hunting!
