Do you know these First Home Buyer Mistakes to Avoid?

Buying your first home in Ferntree Gully is an exciting milestone, but it's also one of the biggest financial decisions you'll ever make. Many first-time buyers unknowingly make costly mistakes during the application process that could have been avoided with proper guidance.

As mortgage brokers at Craft Financial, we've seen these same errors repeated countless times. Understanding these common pitfalls can save you thousands of dollars and help you secure your first Home Loan with confidence.

Not Getting Pre-Approved Before House Hunting

One of the most frequent mistakes first home buyers make is falling in love with a property before understanding their borrowing capacity. Without getting pre-approved, you might:

• Waste time looking at homes outside your budget
• Miss out on properties within your price range at auctions
• Face disappointment when your loan amount doesn't match your expectations
• Appear less attractive to sellers who prefer buyers with finance already arranged

Getting pre-approved gives you a clear picture of your financial situation and shows sellers you're serious about buying.

Ignoring Your Loan to Value Ratio (LVR)

Many first-time buyers don't fully understand how their deposit affects their loan terms. If your LVR exceeds 80%, you'll typically need to pay lenders mortgage insurance (LMI), which can add thousands to your costs.

For example, LMI on a $500,000 home with a 10% deposit could cost between $8,000-$15,000. However, first time home buyer schemes like the Home Guarantee Scheme can help eligible buyers avoid LMI with deposits as low as 5%.

Overlooking Government Support Programs

Ferntree Gully residents often miss out on valuable government assistance because they don't know what's available. First time home buyer programs include:

• First home owner grants (FHOG) - currently $10,000 for new homes in Victoria
• Stamp duty concessions or exemptions
• Various first time home buyer schemes offered by different lenders
• Shared equity programs that reduce your required deposit

These benefits and packages can significantly reduce your upfront costs, but many buyers only discover them after it's too late to apply.

Choosing the Wrong Interest Rate Type

Deciding between variable interest rate and fixed interest rate options without proper consideration is another common error. Each has advantages:

Variable rates typically offer:
• Access to offset account features
• Interest rate discounts and package benefits
• Flexibility to make extra repayments

Fixed rates provide:
• Certainty with repayment amounts
• Protection against rate rises
• Budgeting security for new homeowners

Many first home buyers rush this decision instead of considering their personal circumstances and risk tolerance.

Not Shopping Around for Lenders

Working directly with one bank limits your options significantly. As mortgage brokers, we can access Home Loan options from banks and lenders across Australia, giving you access to banks and lenders nationwide rather than just one institution.

Different lenders offer varying:
• Interest rates and fees
• Loan features and flexibility
• Assessment criteria for your application
• Customer service levels

This means the difference between approval and rejection, or thousands of dollars in interest over your loan term.

Inadequate Documentation Preparation

The application process requires extensive paperwork, and incomplete documentation causes significant delays. Essential documents include:

• Recent bank statements (usually 3-6 months)
• Payslips and employment letters
• Tax returns and financial statements
• Identification and residency proof

Having a streamlined application process starts with proper preparation of all required documents before you apply for a home loan.

Not Considering Future Investment Plans

While focusing on your first home, it's worth considering how your loan structure might affect future investment opportunities. Some loan products offer better flexibility for investment loan options when you're ready to purchase your first investment property.

Discussing your long-term goals during your initial home loan application can save refinancing costs later.

Underestimating Additional Costs

First home buyers often focus solely on the deposit and forget about other significant expenses:

• Stamp duty (even with concessions)
• Legal and conveyancing fees
• Building and pest inspections
• Moving and connection costs
• Ongoing maintenance and council rates

These costs can add up to tens of thousands of dollars beyond your deposit and should be factored into your financial planning.

Avoiding these common mistakes can make the difference between a smooth home buying experience and a stressful, costly journey. The property market in Ferntree Gully offers wonderful opportunities for first home buyers who approach the process with proper knowledge and support.

Call one of our team or book an appointment at a time that works for you. At Craft Financial, we'll help you navigate the home buying process and secure the right loan for your circumstances.