Buying your first home is exciting, but it's also one of the biggest financial decisions you'll ever make. Unfortunately, many first-time buyers in Queensland make costly mistakes that could have been avoided with the right guidance.
As experienced mortgage brokers, we've seen these errors time and again. The good news? Most are completely preventable when you know what to watch out for.
Not understanding your borrowing capacity
One of the most common mistakes is not knowing exactly how much you can borrow before you start house hunting. Many first home buyers fall in love with properties outside their price range, only to discover later that their loan amount won't stretch that far.
Your borrowing capacity depends on several factors:
• Your income and employment history
• Existing debts and monthly expenses
• Your deposit size
• Your financial situation overall
Getting pre-approved for your first home loan gives you a clear picture of what you can actually afford, helping you focus on properties within your budget.
Overlooking additional costs
The purchase price isn't the only cost when buying a home. First time home buyers often forget about:
• Stamp duty (though some exemptions may apply for first home buyers in QLD)
• Building and pest inspections
• Legal fees
• Moving costs
• Lenders mortgage insurance (LMI) if your deposit is less than 20%
These extras can add tens of thousands to your total cost. Factor them into your budget from the start to avoid nasty surprises.
Missing out on first time home buyer schemes
Queensland offers several programs to help first home buyers, but many people don't know they exist or how to access them:
• First home owner grants (FHOG) for new homes
• Home Guarantee Scheme allowing purchases with smaller deposits
• Stamp duty concessions for eligible buyers
• Various first time home buyer programs with special benefits
A mortgage broker with access to banks and lenders nationwide can help you identify which packages you're eligible for and how they might reduce your costs.
Choosing the wrong loan structure
Not all home loans are created equal. First home buyers often accept the first offer they receive without exploring their options. Key considerations include:
Interest rate types:
• Variable interest rate loans offer flexibility but rates can change
• Fixed interest rate loans provide certainty for a set period
• Split loans combine both approaches
Loan features:
• Offset account options that can save you thousands in interest
• Redraw facilities for accessing extra payments
• Interest rate discounts for certain professionals or circumstances
Mortgage brokers have access to home loan options from banks and lenders across Australia, not just the major banks. This means more choice and potentially lower costs for you.
Ignoring your loan to value ratio (LVR)
Your LVR is the percentage of the property value you're borrowing. If you're borrowing more than 80% of the property's value, you'll typically need to pay lenders mortgage insurance (LMI).
While LMI adds to your costs, it's not always worth waiting to save a larger deposit, especially in Queensland's property market where prices continue to rise. Sometimes the benefits of entering the market sooner outweigh the LMI cost.
Rushing the application process
Applying for a home loan requires careful preparation. Having your paperwork ready speeds up the process and improves your chances of approval. You'll typically need:
• Recent bank statements
• Payslips and employment letters
• Tax returns
• Details of any existing debts
A streamlined application process starts with good preparation. Don't wait until you've found your dream home to start gathering documents.
Not considering future plans
Your first home doesn't have to be your forever home. Many buyers later want to keep their first property as their first investment property when they upgrade. This strategy can work well, but it affects the type of loan and features you should choose initially.
Investment loan options and investment loan applications have different requirements, so it's worth considering this possibility when structuring your first home loan.
Going it alone
Perhaps the biggest mistake is trying to handle everything yourself. Home finance and mortgage brokers exist to help you avoid these pitfalls. They can:
• Assess your financial situation objectively
• Explain complex terms and conditions
• Compare products from multiple lenders
• Handle much of the paperwork
• Provide ongoing support throughout the process
Working with experienced mortgage brokers gives you access to professional expertise and industry connections that can save you time, money, and stress.
Buying a home should be an exciting milestone, not a source of regret. By avoiding these common mistakes and getting professional guidance, you'll be well-positioned to make informed decisions that serve your long-term financial interests.
Ready to start your home buying journey the right way? Call one of our team or book an appointment at a time that works for you. We're here to help Queensland first home buyers access the right loan for their situation.
