In short: The seven mistakes we see most often from Melbourne first home buyers are shopping without a pre-approval, budgeting to the maximum loan, forgetting upfront costs, missing government support, bidding at auction without understanding that there is no cooling-off, skipping inspections and the Section 32, and changing jobs or taking on debt before settlement. Each one is avoidable with a little planning.
Gorakh Timilsina assessed hundreds of loan applications as a senior credit officer before founding GNT Finance, and the same handful of problems turned up in the files then that turn up in our office now. None of them come from stupidity. They come from doing something for the first time with no map. Here is the map.
1. Inspecting homes before you know your borrowing power
Falling for a $780,000 townhouse in Mill Park and then discovering your ceiling is $650,000 is painful, and it happens every weekend. Borrowing power depends on income, existing debts, living expenses, credit card limits, HECS, dependants and the lender's assessment rate, which is your actual rate plus 3 percentage points.
Fix: Get a written pre-approval before your first serious inspection. It sets your ceiling, shows agents you are a real buyer, and speeds up the formal approval later. Start with the borrowing power calculator, then read our pre-approval guide.
2. Budgeting to the absolute maximum
A lender saying you can borrow $700,000 is not a lender saying you should. Assessment rates include a buffer, but the buffer is there to protect the lender, not your weekends.
For illustration, at 6.00% p.a. over 30 years, a $700,000 loan costs $4,197 a month. A $600,000 loan costs $3,597. That $600 a month difference is the gap between comfortable and stretched when the car needs tyres or a baby arrives.
Fix: Decide your own comfortable repayment first, then work backwards to a purchase price. Use the mortgage repayment calculator and test the figure against a rate 1% higher than today's.
3. Forgetting the costs on top of the deposit
Buyers save a deposit and forget that stamp duty, conveyancing, building and pest inspections, lender fees, moving costs and a few weeks of double rent all land at once.
| Cost item on a $650,000 established home, first home buyer | Indicative |
|---|---|
| Deposit (5%) | $32,500 |
| Stamp duty (sliding concession between $600,001 and $750,000) | Reduced from $34,070; check the exact figure with the SRO |
| Conveyancing, inspections, lender and registration fees | A few thousand dollars combined |
| Removalists, connections, immediate repairs | Variable |
At $600,000 or less the duty disappears entirely for first home buyers who live in the property for 12 months, which is why so many buyers target that line. The upfront costs calculator puts real figures on your situation.
Fix: Save for the deposit plus costs, or plan how the gap is covered (a family gift, or a lender that allows LMI to be capitalised).
4. Missing the government support you are entitled to
In 2026 a first home buyer in Melbourne can potentially combine:
- The First Home Guarantee: 5% deposit, no LMI, no income cap, property up to $950,000 in Melbourne.
- The Victorian First Home Owner Grant: $10,000 for a new home valued up to $750,000.
- The first home buyer duty exemption up to $600,000 and concession to $750,000.
- Help to Buy shared equity, if your income is under $100,000 as a single or $160,000 as a couple.
Not everyone qualifies for everything, but plenty of buyers pay LMI or full duty when they did not need to.
Fix: Check each program against your situation. Our first home buyer guide for Victoria walks through all four, and the full first home buyer handbook goes deeper.
5. Bidding at auction without understanding the rules
In Victoria there is no cooling-off period when you buy at auction, or within three clear business days before or after a publicly advertised auction. The contract is unconditional the moment the hammer falls. No finance clause, no building inspection clause, no changing your mind.
Fix: Before auction day, have your finance formally approved for that specific property where possible, have the contract and Section 32 reviewed, complete your inspections, and set a walk-away price you write down and give to a friend. Read buying at auction in Victoria and the cooling-off period page first.
6. Skipping the building and pest inspection and the Section 32
A few hundred dollars for an inspection feels expensive until you find the stumps are rotten or the extension has no permit. The Section 32 vendor statement is mandatory in Victoria and lists title details, encumbrances, planning overlays, owners corporation information and more. Buyers routinely sign without reading it.
Fix: Engage a conveyancer before you make an offer, not after. Have them review the Section 32 and contract. Book the inspection during the cooling-off period on a private sale, or before auction day. See building and pest inspection rights.
7. Changing your financial position between approval and settlement
The loan is approved on the basis of your job, your debts and your savings on the day of assessment. Buyers then resign to start a new role, buy a car on finance, or open a buy-now-pay-later account. Lenders can and do re-check before settlement. A changed position can mean a withdrawn approval, and on an unconditional contract that means you are in breach.
Fix: Freeze your financial life from application to settlement. No new credit, no job changes without talking to your broker first, and no large unexplained transfers. If something must change, tell us early so we can manage it with the lender. Our page on what happens if finance falls through explains the stakes.
A quick pre-purchase checklist
- Written pre-approval in hand.
- Comfortable repayment decided, tested at a higher rate.
- Deposit plus costs saved or accounted for.
- Grants and schemes checked and applied for.
- Conveyancer engaged and Section 32 reviewed.
- Building and pest inspection completed.
- No changes to jobs, debts or savings until the keys are in your hand.
Frequently asked questions
Do I really need a pre-approval before looking at homes?
You can inspect without one, but you should not make an offer or bid without one. A pre-approval tells you your realistic ceiling, saves you from falling for homes you cannot afford, and makes your offer credible. In a competitive Melbourne market, agents often prioritise buyers who can show they are ready to proceed.
How much should I keep aside after buying my first home?
Aim to settle with at least a couple of months of repayments in an offset or savings account. Moving costs, connection fees and small repairs arrive quickly, and a buffer means a rate rise or an unexpected bill does not become a crisis. Lenders also look more favourably on applicants with post-settlement savings.
Is buying at auction a bad idea for first home buyers?
Not necessarily, but it demands more preparation. Because there is no cooling-off period and the contract is unconditional, you need finance, inspections and legal review finished before the auction. Many first home buyers prefer private sales for the three clear business days of cooling-off and the ability to include a subject-to-finance clause.
What if I have already made one of these mistakes?
Most are recoverable. If you have overcommitted, a broker can review whether a different lender or loan structure helps. If you have taken on new credit before settlement, tell your broker immediately so the lender can be managed. The worst outcome comes from hiding a problem until the lender discovers it.
Talk to GNT Finance
First home buyers across Melbourne's north come to GNT Finance because we explain the process in plain English, in English, Nepali or Hindi, and we catch the mistakes before they cost you. Book a free consultation with Gorakh Timilsina or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.