Buying your first home or starting with your very first property investment in Australia is an exciting milestone – but it can also be overwhelming. Many first-time buyers fall into similar traps when navigating mortgages, contracts and the hidden costs of purchase. Knowing what are the most common mistakes first-time home buyers make can save you thousands of dollars (and a lot of stress) down the track. This guide walks through the top 10 first home buyer mistakes – from skipping loan pre-approval to underestimating fees – and gives practical tips to avoid them, Aussie-style. By learning from these pitfalls up front, you’ll be in a stronger position to buy confidently and get the home you really want.
1. Skipping Mortgage Pre-Approval
One of the biggest blunders is starting your home search without a home loan pre-approval. A pre-approval from a lender gives you a clear picture of how much you can borrow. It’s not the final loan, but a lender’s estimate based on your income, savings and credit. Getting pre-approved early means you shop with confidence and know your true budget.
Pre-approval typically lasts 3–6 months and shows you’re eligible to apply for a loan up to a certain amount. In practice, you can narrow your search to homes you can afford and avoid that heartbreak of falling for a house $50K out of reach.
How to avoid this mistake: Start by getting a realistic home loan estimate before you even attend open inspections. Approach a trusted lender or broker like Liviti Property early, and provide proof of income and savings. Once pre-approved, stick to that price range – if your lender says $600,000, don’t waste time looking at $700,000 listings. Always remember: pre-approval isn’t a guarantee, so keep your contract conditional on finance until final approval comes through.
2. Underestimating Costs and Overstretching Your Budget
Most first buyers focus on saving a deposit – but forget about the many other costs. It’s easy to think “I have 10% saved, I can stretch to 20%,” and underestimate everything else. In reality, on top of the purchase price you must budget for stamp duty (transfer duty), and other costs. These include lender’s mortgage insurance (if applicable), transfer fees, building and pest inspections, legal fees and moving costs”.
For example:
- Stamp duty (land transfer tax): A large one-off tax on property purchases, varying by state and purchase price.
- Lenders Mortgage Insurance (LMI): Applies if you borrow more than 80% of the home’s value. (It’s a one-off insurance premium protecting the lender).
- Building/pest inspection fees: Typically $400–$800, but priceless protection.
- Legal or conveyancing fees: To prepare contracts, generally $1,000–$2,000.
- Mortgage application or establishment fees: Could be hundreds.
- Moving costs and utility connections: Thousands if you factor movers, cleaning, electricity deposits, etc.
- Ongoing costs: Council rates, home insurance and (for units) strata fees – which can add “thousands per year” to your outgoings.
In short, financing your home is about more than just the sale price. Moneysmart recommends aiming for a 20% deposit plus enough to cover these extra buying costs. Otherwise, you might get caught out and end up borrowing more than you should.
How to avoid this mistake: Draw up a detailed budget. List all potential fees and do some research (ask your lender or a broker what up-front costs you’ll pay). Use online calculators to double-check your numbers.
A good trick is to simulate a 2% interest rate rise on your repayments – if you’re still comfortable, you have a buffer. Remember, if you’re pre-approved for a certain loan amount, factor in these extra costs when deciding how much of that loan to use. In practice, think “10% deposit + 10% extra costs” as a rule of thumb, not just “10% deposit.”
3. Missing Out on Grants and Concessions
Australian governments offer several schemes to help first home buyers – but not investigating these perks is a costly oversight. Depending on your state or territory, you may be eligible for:
- First Home Owner Grant (FHOG): A one-off payment (often around $10,000) for new homes in many states.
- Stamp duty exemptions/concessions: First-timers often pay reduced or no stamp duty below certain price thresholds. (For example, NSW provides duty concessions for homes up to $800,000).
- First Home Loan Deposit Scheme (FHLDS): A federal program that lets eligible buyers with 5% deposits avoid paying LMI.
- Shared equity or equity loan schemes: Some state programs partner with you to buy a part of the home, reducing the loan required.
Read More: Everything You Need To Know About First Home Owner Grant
“Buying your first home can be expensive, but several federal and state government initiatives could ease the financial burden,” notes the Realestate guide. Taken together, these incentives could save you tens of thousands.
How to avoid this mistake: Do your homework early. Visit the revenue office websites for your state (e.g. NSW, VIC, QLD) or use the national First Home Buyer Calculator to check eligibility for grants and stamp duty relief. Many programs have conditions (e.g. the home’s value or location), and you usually need to apply before settlement. A mortgage broker or financial counsellor can also flag any entitlements. Don’t assume “I won’t qualify” – at minimum, make sure you claim the easiest benefits (like the FHOG) if you do qualify.
4. Skipping Professional Advice Early As First Home Buyer
Trying to save money by not hiring experts can backfire. Two common mistakes here are not engaging a conveyancer (or solicitor) early, and not getting mortgage advice from a broker.
- Conveyancer/Property Lawyer: This professional handles the legal side of your purchase. Their job is to review contracts, check for caveats or easements, and ensure the title transfers correctly. Many buyers don’t realise how complex contracts can be. As real estate experts warn, failing to use a conveyancer “before signing a contract is crucial” because they can spot issues you might miss. Differences in contract conditions from state to state (for example, cooling-off periods or special clauses) can expose you to risk.
- Mortgage Broker or Advisor: Professional brokers like Liviti Property compare home loan products from multiple lenders and can tailor a loan for your situation. They often spot things like unnecessary fees or better interest rates you might miss. Even if you apply directly to a bank, consider at least chatting to a broker to ensure you’re getting competitive terms.
How to avoid this mistake: Talk to professionals early and get quotes. Ask friends or family for recommendations on a good conveyancer/solicitor. Many offer fixed-fee conveyancing with online portals. At a minimum, never sign a contract without having it checked by a solicitor. Similarly, book time with a mortgage broker to discuss loan options – some brokers provide their guidance free to you (they earn commission from lenders). The cost of experts is small compared to the cost of a bad deal or a missed clause.
5. Overlooking Building and Pest Inspections in Property Investment
It might seem like an easy way to save money, but skipping pre-purchase inspections is a very risky mistake. A qualified building inspector will look for structural issues (rotting timber, cracked foundations, unsafe electricals, while a pest inspector checks for termites and other infestations. First home buyers sometimes think “it’s brand-new, so it must be fine,” or “I’ll just waive inspection to win an auction.” In reality, hidden defects discovered later can cost tens of thousands to fix or even make the home uninhabitable.
As one conveyancing expert puts it, a building and pest report is essential for uncovering hidden issues that could turn your dream home into a costly headache. These problems aren’t always obvious – you won’t see termites behind walls or rising damp under the surface until too late.
How to avoid this mistake: Always organise a pre-contract building and pest inspection or make your offer conditional on satisfactory inspections. Use a licensed inspector and, if buying an apartment or townhouse, also consider a strata inspection. Factor the cost of inspections into your budget – it’s an investment in peace of mind.
If a report flags major issues, you can often renegotiate the price or ask the seller to fix problems before you commit. Never be pressured into declining inspections; that pressure is usually from sellers who want to hide defects.
6. Letting Your Heart Rule Instead Of Your Head
It’s easy to fall in love with a home. That picture-perfect bungalow or renovated unit can sweep you off your feet. But one of the most common pitfalls is getting carried away by emotions and overlooking your budget and needs. When property buyers fixate on aesthetics, they may bid more than they should or ignore warning signs (like noisy neighbours or a leaky roof).
Realestate.com.au calls this “letting your heart rule over your head,” warning that you might “stretch beyond your budget or get so attached that you fail to see flaws”. Instead, you need a clear plan and wish list. Moneysmart recommends listing your must-haves vs nice-to-haves, so you stay grounded. For example, a list of must-haves might include proximity to public transport, two bedrooms, and a backyard (for kids or pets). Nice-to-haves might be a renovated kitchen or designer taps.
How to avoid this mistake: Before viewing homes, write down your non-negotiables. When inspecting, keep that list in mind – if a property fails on any must-have (say, it’s too far from work or outside your school zone), remind yourself that you’ll find better. It might help to bring a friend or family member along to give a second opinion. Most importantly, set a firm maximum price and stick to it no matter how charming a house is. A buyer’s advocate or broker can also provide an objective view if you feel yourself getting too excited.
7. Underestimating Auctions and Bidding
In Australia, many properties (especially in cities) sell at auction or via aggressive negotiation. Going in unprepared is a trap. Remember: auctions are unlike private sales. There is no cooling-off period once you win at auction, so you can’t back out without penalty. The excitement of bidding can lead you to stretch your budget in the moment.
One property lawyer notes that “the sense of competition on auction day” can cause buyers to overextend themselves. That’s why it’s crucial to have done your homework and set a strict bid limit beforehand. Never raise your paddle higher than your absolute maximum. If an auction goes beyond your price, be prepared to walk away – there will always be another home.
How to avoid this mistake: If you choose to bid at auction, get there early and register your interest. Watch a few auctions first to get comfortable with the process. Set a clear maximum bid and tell a partner or observer so they can hold you to it. Remember, at auction you pay a deposit immediately and lose the luxury of conditions (no finance or inspection clauses usually). If auctions stress you out, consider submitting an offer via private treaty instead, or use a professional bidder (some buyers’ agents offer this). Above all, know that buying under pressure is a recipe for mistake – so stay cool and calculate, not caught up in the atmosphere.
8. Assuming the Selling Agent Is on Your Side
A subtle but important mistake: trusting the seller’s real estate agent as if they are working for you. In reality, the agent is legally obligated to get the best deal for the seller. Even if the agent is friendly, their loyalty is to the vendor’s interests. As one real estate guide bluntly notes, “many first home buyers believe a friendly selling agent may be on their side during a negotiation – in practice, they are obligated to negotiate against them for their vendor”.
This means the agent will highlight positives and downplay negatives of the property, and may encourage you to make quick decisions. Don’t be shy about doing your own investigation (asking neighbours, researching comps, getting independent reports, etc.).
How to avoid this mistake: Treat everything a selling agent says with a grain of salt. Always do your homework separately – check the property’s sales history, compare recent sale prices in the area, and visit at different times of day if you can.
Consider getting your own buyer’s agent if negotiations feel uncomfortable; a buyer’s agent or broker represents you exclusively. At minimum, discuss any big decision with a trusted friend or advisor. Remember: just because the agent says, “We have other offers,” you don’t have to act immediately. You’re not a broadcaster competing in an open mic night – stay calm and stick to your plan.
9. Failing to Read the Contract’s Fine Print
Even after you find your dream home, the process isn’t over. Many first buyers sign contracts in a hurry or without understanding all the terms – a costly mistake. The sale contract (and related documents like section 32 in Victoria, or vendor’s statement in other states) is legally binding and full of important details: payment schedules, settlement dates, special inclusions/exclusions, and more. Missing a clause can bite you later.
A conveyancer warns that failing to read the fine print of a contract can lead to significant issues down the line. For example, there might be unusual conditions like the need to obtain council approvals, or inclusions you thought were in the sale price.
How to avoid this mistake: Don’t sign anything immediately. Have your lawyer or licensed conveyancer review every page of the contract before you put down your deposit. They will explain any special conditions. Look out for: your cooling-off rights (which vary by state), deadlines for loan approvals, and any unique terms (like “subject to vendor leaving certain furniture”. If buying at auction, remember there is no cooling-off period, so your protections are even slimmer. In all cases, only sign when you are absolutely clear about each clause. As the saying goes: never sign what you haven’t read.
10. Neglecting Future Needs and Resale Value
Finally, many first buyers buy with today in mind and forget tomorrow. Your first home might not be your forever home – so thinking about future needs and the property’s resale potential is wise. Common oversights include ignoring school zones (if you plan a family), buying in an area with declining infrastructure, or getting a place that can’t adapt to your lifestyle changes.
Consider the potential resale value and think about features like extra bedrooms or yard space if you want kids or a pet. Also look at suburb amenities (public transport, shops, parks) and any upcoming development plans.
How to avoid this mistake: Be honest about your 5–10 year plan. If you’re hoping to grow a family, prioritise family-friendly suburbs and homes with space. If you’re buying with a partner, discuss what changes (kids, pets, work from home needs) might come. Consider at least how easy it would be to sell or rent the place later. A home near good schools, transport and shops usually holds value well. Think of it like buying a good second-hand car: you’ll want features that the next buyer also loves. In short, avoid a “cute now but cramped later” syndrome by planning a bit ahead.
Buying a first home is a big achievement – and it should be a positive experience. By steering clear of these pitfalls, you’ll keep your savings intact and your goals on track. Remember, even seasoned buyers made mistakes the first time around; the trick is to learn from them. If you need guidance at any step (loan applications, choosing the right suburb, finding the best deal), don’t hesitate to get help.
At Liviti Property, our team specialises in helping first home buyers navigate the market smartly. With expert advice on budgeting, financing and finding properties, we’ll make sure you avoid these common traps. When you’re ready to take the next step towards owning your first home, Liviti is here to support you every metre of the way. Reach out to our friendly advisors – let’s turn your home-buying dream into a reality, without the headaches.
Frequently Asked Questions (FAQs)
- What is the biggest mistake first home buyers make in Australia?
Failing to conduct sufficient research and underestimating the total costs involved in the property purchase are the most common mistakes. - How do I avoid overpaying for my first home?
Stay within your budget and avoid getting emotionally attached to a property. Seek professional advice to ensure the property is priced fairly. - Should I get pre-approved for a loan before house hunting?
Yes, securing pre-approval ensures you’re looking at properties within your financial means and puts you in a stronger negotiating position. - What are the hidden costs of buying a home?
Stamp duty, legal fees, building inspections, and lender’s mortgage insurance are common hidden costs first-time buyers overlook. - How much can I borrow as a first home buyer in Australia?
The average first home buyer loan size in 2024 was approximately $497,692, but your borrowing capacity depends on various factors, including income and debt levels. - When is the right time to buy a property? T
he right time to buy is when you are financially prepared, not when you think the market is perfect. Long-term financial readiness is key. - Should I use a buyer’s agent?
Yes, a buyer’s agent can help you find the right property, negotiate better deals, and protect your interests throughout the process. - What are the risks of not conducting a property inspection?
Skipping an inspection can lead to discovering costly issues after purchase. A professional inspection helps identify potential problems before you commit. - How do I choose the right location for investment?
Focus on areas with strong growth potential, good amenities, transport links, and long-term value prospects. Avoid being swayed by short-term trends. - Can I afford to buy my first home in Australia?
Understand your financial situation, including income, debts, and ongoing costs. Use a pre-approval process and speak to a financial advisor to assess affordability.
