What Not to Do Before Buying Your First Home

Most first home buyer trouble starts well before the loan application, usually in the months when nobody is checking the numbers. If you live in Alton Downs and plan to buy, a little groundwork now saves a lot of back-and-forth later.

This guide covers the missteps we'd steer you away from, and what to do in their place.

What Should a First Home Buyer Do Before Looking at Properties?

Before you open a single listing, work out what a lender is likely to let you borrow and what you are comfortable repaying. Those two numbers are rarely the same, and the second one matters more.

Start with our borrowing capacity page to get a rough idea of your limit. Then build a first home buyer budget around your real life: fuel for the drive into Rockhampton, rates, insurance, and the odd repair bill that comes with owning your own place. A lender's maximum is a ceiling, not a target.

Don't Skip Pre-Approval

Pre-approval gives you a written indication of how much a lender may lend you, so you can make offers with confidence. It is not a final approval, and it can change if your income, debts or the property itself change.

Getting it early also shows up problems while you still have time to fix them. A forgotten credit card limit or a buy-now-pay-later account can reduce what you can borrow. Closing or lowering those before you apply is far less stressful than finding out after you have fallen for a house. Pre-approval usually has an expiry date, so time it for when you are genuinely ready to buy.

How Much Does a Small Repayment Change Really Matter?

Testing your repayments before you buy is the most reliable way to know whether a loan fits your budget. A figure on paper feels different once it leaves your account every month.

Consider a buyer who is weighing up a $400,000 loan over 30 years. At an illustrative rate of 6.75% p.a., principal and interest repayments would come to roughly $2,595 a month, or about $599 a week. Their rent is currently $500 a week.

The gap is about $99 a week, and that is before council rates, insurance and maintenance. So the buyer spends three months moving that difference, plus an estimate for those costs, into a separate savings account. They find the budget is tight but manageable, and they also see that a smaller loan would leave more breathing room. They go into their home loan application knowing exactly what they can carry. Your own numbers will differ, so run them through our loan repayments calculator.

Don't Assume Your Deposit Is Too Small

A smaller deposit does not rule you out. Eligible first home buyers may be able to use the Australian Government 5% Deposit Scheme to buy with a 5% deposit without paying LMI, subject to eligibility and price caps. The scheme is accessed through participating lenders, and the price caps depend on location.

Outside the scheme, low deposit loans often involve Lenders Mortgage Insurance (LMI). Lenders often charge it when your deposit is under 20%, and it is an added cost you pay once, either upfront or added to the loan. If it is added to the loan, you pay interest on it as well. We can compare how different deposit sizes affect your costs, and check whether the scheme suits you, so you choose with the full picture in front of you.

Gift Deposit: What Lenders Usually Want to See

If family is helping with your deposit, lenders often want evidence that it is a genuine gift and not a loan you will have to repay. Policies differ between lenders, so check before the money moves.

It helps to sort this out early. A gift that lands in your account the week before you apply can raise questions about where it came from and whether it counts as genuine savings. Talk to us before the transfer, and we can tell you what the lender is likely to ask for.

Check Grants and Stamp Duty Concessions Before You Commit

Queensland has first home buyer grants and stamp duty concessions that may apply to you, but the rules are specific and they change. Check the current eligibility details on the Queensland Revenue Office website before you rely on any figure.

Things like the type of property, whether it is new or established, the purchase price and where you will live all play a part. Our stamp duty calculator gives you an estimate, and our first home buyers page explains how we help buyers line up their options. Always confirm the final outcome with the government source and your own advisers.

Choose Loan Features With the Cost in Mind

Features such as an offset account or redraw can reduce the interest you pay, but they are not always worth having. Loans with an offset account sometimes carry a higher interest rate or an annual fee, so the benefit depends on how much cash you actually keep in it.

A fixed interest rate gives certainty on repayments for a set period, but it can limit extra repayments and may involve break costs if you leave early. A variable interest rate moves with the market, so your repayments can rise or fall. Some borrowers split their loan across both. We compare these home loan options with you against your plans, not just the headline rate.

A Local Broker Who Knows Alton Downs

Buying in Alton Downs often means looking at the wider Rockhampton region, and it helps to have someone who understands how lenders see local properties. Our Alton Downs mortgage broker page tells you more about how we work with locals.

We can compare lenders for you, put your first home loan application together and keep you updated along the way. Call one of our team or book an appointment at a time that works for you, and let's get your first home plan sorted before you start inspecting.

Frequently Asked Questions