The Dos and Don'ts of First Home Loan Prep

Getting your finances in order before you look at properties

Preparing for a home loan before you start inspecting properties means you know what you can borrow, what deposit you need, and how quickly you can move when you find something. In Mount Eliza, where coastal properties can attract multiple offers, having your finances sorted before you bid or make an offer is often what separates buyers who secure a home from those who miss out.

The difference between being ready and being nearly ready is often a few weeks of work and a couple of documents you didn't know you needed. Consider a buyer who found a unit close to the village and wanted to make an offer the same weekend. They assumed their savings account would be enough to prove their deposit, but the lender needed three months of statements and wanted to see how the deposit was accumulated. By the time they gathered everything, another buyer had already exchanged contracts.

Getting your application-ready position sorted early means you can request pre-approval, move quickly, and avoid losing a property because your paperwork wasn't in order. It also means you avoid applying for credit products that could harm your borrowing capacity or discovering eligibility issues after you've already committed emotionally to a property.

What counts as genuine savings and why it matters to lenders

Genuine savings means money that has been in your account and verifiable for at least three months. Lenders want to see that you can save consistently rather than receiving a lump sum shortly before applying. For most first home buyers, this includes funds in transaction accounts, savings accounts, or term deposits that show regular deposits over time.

A gift from a parent or family member can often be used as part of your deposit, but it won't usually count as genuine savings unless it has been in your account for at least three months. Some lenders will accept gifted deposits with a signed declaration, but this depends on the loan-to-value ratio and the lender's policy. If you're relying on a family contribution, speak to a mortgage broker about how that affects your options and whether you need to wait before applying.

Bonus payments, tax refunds, or proceeds from selling assets like a car can also form part of your deposit, but again, most lenders will want to see these funds seasoned in your account. If you're planning to use funds from multiple sources, gather your statements now and check that each source is acceptable before you assume it will work.

How the First Home Guarantee changes your deposit strategy

The First Home Guarantee allows eligible buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. This scheme was expanded in late 2025 and no longer has income caps or location restrictions, which makes it accessible to a much wider group of buyers across Mount Eliza and the rest of Australia.

If you're eligible, this scheme can bring forward your purchase by months or even years because you don't need to save a 10% or 20% deposit. However, places under the scheme are allocated annually and on a first-come basis, so timing your application matters. You'll still need to demonstrate genuine savings and meet standard lending criteria, but the removal of LMI can save you several thousand dollars and allow you to enter the market sooner.

Not every lender participates in the scheme, and some have stricter serviceability rules for low-deposit loans even when LMI is waived. Working with a broker who understands which lenders are currently approving First Home Guarantee applications and how their credit policies differ will improve your chances of approval and help you move quickly when a property becomes available. You can read more about your options as a first home buyer on our first home buyers page.

Checking your eligibility for state-based concessions and grants

Victoria offers a stamp duty concession for first home buyers, with no duty payable on properties up to $600,000 and a reduced amount up to $750,000. There is also a $10,000 First Home Owner Grant available for new homes valued up to $750,000. If you're buying an established home in Mount Eliza, you're likely looking at the stamp duty concession rather than the grant, but both can be stacked with the First Home Guarantee.

To be eligible for these concessions, you need to be buying your first home, intend to occupy it as your principal place of residence, and meet residency requirements. The application is usually handled by your conveyancer or solicitor at settlement, but you need to confirm your eligibility before you make an offer so you're budgeting correctly.

If you're also using the First Home Super Saver Scheme to withdraw contributions from your super, you need to apply to the ATO before settlement. This scheme lets you contribute up to $15,000 per financial year, withdraw up to $50,000 total, and benefit from the concessional tax treatment. It requires planning ahead, but it's one of the few ways to boost your deposit while reducing your tax.

Avoiding credit issues that reduce your borrowing capacity

Applying for a credit card, car loan, or buy-now-pay-later account in the months before you apply for a home loan can reduce how much you're able to borrow. Lenders assess your borrowing capacity based on your income, expenses, and existing credit commitments, so even a small personal loan or a credit card with a $5,000 limit can lower your maximum loan amount by tens of thousands of dollars.

Buy-now-pay-later services are now being included in credit assessments by most lenders, even if you don't carry a balance. If you have active accounts with Afterpay, Zip, or similar providers, consider closing them before you apply. The same applies to credit cards you no longer use. If you're not using the card, close the account rather than just cutting up the card, because the credit limit still counts against you.

If you've recently changed jobs, some lenders require you to have been in your role for at least three to six months before they'll approve your application. Casual and contract workers may need to provide additional documentation or meet higher deposit requirements. If you're planning a job change, it's worth speaking to a broker first to understand how that might affect your timeline. For buyers looking at refinancing down the track, understanding how these same factors apply is covered on our refinancing page.

Gathering the right documents before you request pre-approval

Pre-approval gives you a conditional commitment from a lender before you make an offer on a property. It's based on your income, expenses, deposit, and credit history, and it's usually valid for three to six months. Having pre-approval means you can move quickly when you find a property, and it gives sellers and agents confidence that you're a serious buyer.

To apply for pre-approval, you'll need recent payslips, tax returns if you're self-employed, bank statements for all accounts, and proof of your deposit. Lenders will also want to see identification, details of any existing debts, and evidence of any rental history or regular savings. The more complete your documentation, the faster the lender can assess your application.

Some lenders will issue pre-approval within a few days if your situation is straightforward, but others may take a week or more if they need additional information. If you're self-employed, run a business, or have income from multiple sources, the process may take longer. Starting early and working with a broker who knows what each lender requires will keep things moving and help you avoid delays when you're ready to make an offer.

Understanding offset accounts and how they affect your repayments

An offset account is a transaction account linked to your home loan where the balance is offset against your loan balance when interest is calculated. If you have a $400,000 loan and $20,000 in your offset account, you only pay interest on $380,000. This can save you thousands of dollars in interest over the life of the loan and help you pay off your mortgage faster.

Not all home loan products include an offset account, and some lenders charge a higher interest rate for loans that do. If you're likely to keep a decent buffer in your transaction account after settlement, an offset account is usually worth the slightly higher rate. If you're going to run your account close to zero each month, a loan without an offset and a lower rate might make more sense.

Some lenders also offer redraw facilities, which let you make extra repayments and withdraw them later if needed. Redraw is less flexible than an offset because you need to request the funds and there may be delays or fees, but it can still be useful if you want to get ahead on your loan. Your broker can help you compare products based on how you plan to manage your repayments and what features you'll actually use. More information on structuring loans is available on our home loans page.

Choosing between fixed and variable rates when you're starting out

A variable interest rate moves up or down with the market, which means your repayments can change over time. A fixed interest rate locks in your rate for a set period, usually one to five years, so your repayments stay the same regardless of what happens with the official cash rate. Both options have advantages depending on your situation and how much certainty you want.

If you're stretching your budget to buy your first home and need predictable repayments, a fixed rate can help you manage your cash flow without worrying about rate rises. If you want flexibility to make extra repayments or access an offset account, a variable rate usually gives you more options. Some buyers split their loan between fixed and variable to get a mix of certainty and flexibility.

Your choice also depends on where rates are when you apply and where they're expected to move. If fixed rates are significantly higher than variable rates, locking in might not make sense unless you're very risk-averse. If they're similar or lower, fixing can protect you from future increases. Your broker will walk you through current rates and help you decide what suits your income, expenses, and plans for the next few years. If your fixed rate is ending soon, our fixed rate expiry page has more detail on what to consider.

Call one of our team or book an appointment at a time that works for you so we can review your situation, confirm what you're eligible for, and get your application ready before you start looking at properties.

Frequently Asked Questions