.svg)
9 Costly Errors to Avoid
Buying your first home is a huge milestone.
In this guide, we’ll walk you through the most common first home buyer mistakes and share practical tips for avoiding them, helping you make informed decisions when securing your dream home.
Whatever help you need with buying your first home, this guide is designed to help buyers like you navigate the property market with confidence.
1. Skipping Pre-Approval Can Cost You Time in the First Home Buying Process
A common mistake first-time home buyers make is skipping mortgage pre-approval. Without pre-approval, it’s hard to estimate your true borrowing capacity, which can lead to wasted time viewing properties that are out of reach or missing out on a home you can afford.
For example, in NSW, having finance pre-approval is particularly important in areas like Sydney and surrounding suburbs where competition is high. Sellers may prioritise buyers who can demonstrate they’re financially ready over those who do not have pre-approved finance.
The IMB team endeavour to make finance pre-approval straightforward for first home buyers. You can apply online or in person, with documents that verify your income, assets, and liabilities. Once granted, finance pre-approval is generally valid for 90 days, giving you a realistic window to search for your ideal property while giving you confidence and clarity throughout the process.
2. Ignoring Hidden Costs of Buying Your First Home
Found your dream first home? Great! But can you really afford it?
When shopping for a first home, some first-time buyers focus solely on the purchase price of a home and often forget about the ancillary costs. These can include stamp duty, legal fees, moving costs, lender fees, and maintenance. While lenders may approve you for a certain amount, stretching your budget can create financial strain.
Plus, what about when you move in? Beyond mortgage repayments, you may need to account for a number of expensive weekly and monthly costs, such as council rates, utilities, insurance, and ongoing maintenance.
There are several options available to help eligible first home buyers lower the overall cost of buying their first home. Here’s a quick breakdown of the current options for each state and territory:
- In New South Wales, the full exemption is for homes up to $800,000.
- In Victoria, the full exemption is for homes up to $600,000.
- Queensland offers full stamp duty exemption for newly built homes and vacant land.
- South Australia offers full stamp duty exemption for newly built homes and vacant land.
- Tasmania offers full exemption on established homes up to $750,000 (valid until 30 June 2026).
- In Western Australia, the full exemption is for homes up to $500,000.
- Northern Territory stopped their concession programme in 2021.
- ACT has stopped stamp duty on homes up to $1.02 million if you meet the scheme's income and ownership criteria.
Planning for hidden costs in advance and utilising schemes and grants that are designed to help first home buyers can help you minimise unpleasant financial surprises that may otherwise derail your home-buying journey.
3. Not Using Government Grants or Assistance when Buying Your First Home
Failing to explore government grants and schemes is a missed opportunity for many first-time buyers. There are multiple programs designed to help Australians get into the property market sooner.
Housing Australia’s 5% Deposit Scheme makes it easier than ever for Australians to achieve home ownership. Under this scheme, eligible first home buyers can purchase a property with as little as a 5% deposit, while single parents and legal guardians can enter the market with a 2% deposit, all backed by a Government guarantee so that buyers will not have to pay Lenders Mortgage Insurance.
All Australian states and territories offer the First Home Owner Grant (FHOG) which provides a lump-sum payment (all states and territories except Tasmania) or a significant reduction in stamp duty concessions (Tasmania only) to eligible applicants to help them with the purchase of their first home.
By not applying for these programs, you could be missing out on tens of thousands of dollars in potential savings. Our blog First Home Buyer Schemes: How to Maximise Your Government Benefits goes into more detail on what’s available. Taking the time to research and apply for the right grants could make all the difference.
4. Skipping Pre-Purchase Inspections
Purchasing a home without a thorough building and pest inspection (or without reviewing a strata report for strata title properties) can be a risky mistake. Hidden issues like internal damage or structural problems can end up costing thousands of dollars to repair later down the line.
First-time buyers may feel confident in a property based on appearances, but professional inspections uncover issues that aren’t visible to the untrained eye.
Investing in these inspections may seem like an extra cost upfront, but it may save you money and stress down the line.
5. Neglecting Location Research When Looking at First-Homes
Your home isn’t just the building; it’s also the area you live in.
Failing to research the neighbourhood may mean that you overlook aspects of the area that could impact on your quality of life and the future value of your property. Try to consider factors like local amenities, schools, public transport, commute times and future development plans.
For example, buying in an up-and-coming suburb in NSW might offer great potential for capital growth, but if transport links are limited, your daily life could be more challenging. Thorough research can help towards ensuring your home fits both your lifestyle and long-term investment goals.
6. Becoming Too Emotionally Attached to a Property
It’s easy to fall in love with a property, but making decisions based purely on emotion could be costly. First-time buyers should ideally approach their purchase with a clear mind, focusing on practical considerations and financial viability rather than aesthetics alone.
Instead of focusing on how the house looks, consider what your “must haves” are. A helpful strategy would be to make a checklist of non-negotiables for your future home, such as budget, number of bedrooms, and proximity to work or school, and stick to it when evaluating properties.
7. Failing to Seek Professional Advice when Buying Your First Home
We know that professional guidance adds to your first home buying budget, but it can help make the process easier and improve outcomes.
Navigating contracts, mortgage options, and legal requirements without professional guidance can be difficult for any buyer, let alone one purchasing their first home. The buying process can be complex, and if possible, we’d always recommend seeking advice when you can.
For example, engaging a solicitor or conveyancer to review contracts ensures you’re legally protected, while a mortgage broker can help you find a home loan that suits your financial situation.
Even experienced buyers may overlook critical details, so getting expert advice is crucial, especially when it’s your first property purchase.
8. Not Comparing Lenders
Many first-time home buyers make the mistake of settling with the first lender they approach, often out of convenience or a lack of awareness. However, this approach may lead to missed opportunities for better rates, features, and overall loan conditions.
It's also important to consider the comparison rate, which includes the interest rate plus most fees and charges. This provides a more accurate picture of the total cost of the loan and allows for better comparisons between different lenders.
At IMB Bank, we provide tools and resources to help you understand and compare these rates effectively. For example, our home loan repayments calculator is a quick and easy way to assess if your home loan is working for you, and how much you could save by changing your repayments.
9. Rushing the Process when Buying Your First Home
Buying your first home is an exciting milestone, but rushing the process can lead to costly mistakes.
Simple errors like skipping research, making hasty offers, or ignoring pre-approval may create unnecessary stress and financial risk. Taking your time allows you to make informed decisions, negotiate better deals, and take advantage of available grants and schemes.
Remember, it’s better to wait for the right property than to rush the process and potentially regret your purchase.
IMB Bank is here to support first-time buyers every step of the way when securing their property. From federal and NSW-specific schemes like the First Home Owner Grant to expert knowledge on mortgage options, our team can help you make confident, informed decisions.
Buying your first home may feel overwhelming, but with the right guidance and support, it can be an enjoyable process. IMB Bank is committed to helping you navigate the process, understand available grants and schemes, and make informed decisions.
If you’re ready to take the next step, get in touch with us to explore your home loan options and start your journey toward owning your first home.
Want to speak with an IMB home loan consultant?
Reach out on 133 462 or book an appointment.
