Credit rating

Your credit rating (or credit score) is simply a snapshot of your financial track record.

It shows lenders how reliably you’ve handled money in the past – from credit cards and personal loans to car finance and even phone plans.

Banks use this score to assess risk. A strong credit rating can mean faster approval and, sometimes, better loan terms. A weak rating, on the other hand, can narrow your options.

The good news is that this is something you can improve. Before applying for a loan:

• Check your credit file
• Pay down outstanding debts where possible
• Avoid making multiple credit applications in a short timeframe

Small, steady financial habits build trust over time. And in lending, trust translates to borrowing power.

Mortgage broker

Think of a mortgage broker as your home loan matchmaker.

Instead of approaching just one bank, a broker compares products from multiple lenders to find a solution that best suits your situation.

They assess your income, expenses and goals, then recommend loan structures and interest rate options. They also manage the paperwork and lender communication along the way.

For first-home buyers, having the right broker on your side is invaluable. Because the right broker goes beyond securing approval. They help you understand the loan and structure it to support both your immediate purchase and your longer-term plans.

Our recommendation? Aqua Financial Services, which specialises in guiding buyers through the process with clarity and confidence.

 

 

Pre-approval

Pre-approval (also known as conditional approval) is when a lender agrees, in principle, to lend you a certain amount before you’ve secured a property.

It’s based on your income, expenses, debts and credit history. While it’s not a final guarantee, it shows sellers and agents that you’re serious, organised – and financially ready.

In practice, pre-approval gives you a clear budget. You know your ceiling. You understand your range. So now you can search with confidence and avoid falling in love with homes outside your budget.

Also, if you’re looking in competitive markets – particularly if you’re considering auctions – pre-approval is a must-have.

Borrowing capacity

Your borrowing capacity is the maximum amount a lender is prepared to loan you. It’s influenced by your:

• Income
• Existing debts
• Living expenses
• Number of dependents
• Current interest rates

However, just because a bank is willing to lend a certain amount doesn’t mean it’s the right one for you. When setting your budget, you need to consider future rate rises, career changes, and more importantly, your broader life plans. Property should support your lifestyle rather than stretch it.

A broker can model different scenarios so you understand what repayments may look like if interest rates increase. Our advice? Treat your borrowing capacity as a limit, not a target. It’s better to choose a level that feels comfortable and sustainable.

Deposit

Your deposit is your upfront contribution toward the purchase price of your home.

In Australia, buyers often aim for a 20% deposit to avoid paying Lenders Mortgage Insurance (LMI). On an $800,000 property, that’s $160,000 upfront. You can buy with a lower deposit – sometimes as little as 5 to 10% – but additional costs may apply.

Your deposit also directly impacts your loan size, monthly repayments and overall financial flexibility. So generally, the higher your deposit, the better.

It’s also important to remember that the purchase price isn’t your only upfront cost. You’ll need to budget for stamp duty, legal fees and moving expenses. Planning your deposit carefully puts you in a stronger position from day one.   

First Home Owner Grant (FHOG)

The First Home Owner Grant is a government incentive designed to help eligible buyers enter the market.

In Victoria, it generally applies to buyers purchasing or building a new home under certain value thresholds. The grant amount and eligibility criteria can change, so always check the latest details before making plans.

In practical terms, the grant can:

• Boost your deposit
• Reduce the amount you need to borrow
• Work alongside stamp duty concessions

It’s free money – but only if you qualify. Do your homework early so you don’t miss out.

Interest rate (fixed vs variable)

Your interest rate determines how much you pay to borrow money – and it directly affects your monthly repayments.

• Fixed rate: This locks in your interest rate for a set period (typically 1 to 5 years). So your repayments stay steady, even if market rates rise.
• Variable rate: This moves with the market. If rates fall, you benefit. But if they rise, your repayments increase.

Some buyers choose a split loan – part fixed, part variable – to balance stability and flexibility. The right structure or choice depends on the market conditions, your risk appetite and your long-term plans.

Auction

An auction is a public sale where buyers bid competitively, and the highest bidder secures the home. In Victoria, auctions are common – and they move quickly.

But here’s the critical point: when the hammer falls and the property is declared sold, the contract is unconditional. That means no cooling-off period. No subject-to-finance clause. You’re legally committed – on the spot.

With the right preparation, however, you’ll know exactly what you’re committing to. To bid with confidence, make sure you:

• Have pre-approval in place
• Review the Contract of Sale beforehand
• Arrange a building and pest inspection before auction day

 

 

Contract of Sale (including Section 32 and Vendor Statement)

The Contract of Sale is the legally binding document that sets out the terms and conditions of your purchase. It includes the price, settlement date and any special conditions.

The agreement comes attached with the Section 32 (Vendor Statement), which discloses key information about the property, such as:

• Title details
• Zoning
• Easements
• Outgoings
• Restrictions

Before signing, you should have a conveyancer or solicitor review both documents. They’ll explain your obligations, clarify the fine print and raise any red flags. Once signed, this contract carries serious legal weight.

Stamp duty

Stamp duty (or land transfer duty) is a government tax payable when you purchase property. In Victoria, the amount is calculated based on the purchase price.

For first-home buyers, concessions or exemptions may apply below certain price thresholds.

Many buyers underestimate this expense, but stamp duty can add tens of thousands of dollars to your upfront costs. So, it’s essential to plan for it early.

The good news? With careful preparation – and potential concessions – you can structure your purchase strategically and avoid last-minute surprises.

Settlement

Settlement is the final step – the moment ownership officially transfers from the seller to you. This typically happens 30 to 90 days after the contract is signed, unless otherwise negotiated.

Before settlement, you’ll complete a final inspection to ensure the property is in the agreed condition. Then, on settlement day:

• Your lender transfers the funds
• Legal documents are exchanged
• The keys become yours

Congratulations, you now officially own your home!

Ready to take the next step? Explore more first-home buyer tips, suburb insights and property advice on The Peer Blog.