Top 10 Mistakes First Home Buyers Make (and How to Avoid Them)

Australia’s property market remains competitive, with rising prices, tighter lending conditions, and limited supply making it increasingly difficult for first-time buyers to enter. In New South Wales, particularly in growing regions like Wollongong, demand continues to outpace supply, putting pressure on buyers to make quick decisions with limited experience. 

For many, this is unfamiliar territory, one filled with legal paperwork, inspections, and financial commitments. That’s why understanding the most common mistakes made by first-time home buyers is so important. A misstep early on can lead to costly outcomes or long-term stress. 

By learning what to watch out for, buyers can approach the process with more clarity and confidence. Let’s explore the top 10 first home buyers’ mistakes and how to avoid them.

Don’t Let First Home Buyer Mistakes Cost You Thousands. Unsure which loan suits your property plans in Wollongong or NSW? SimpleFin’s expert Wollongong mortgage brokers compare lenders, explain the details, and guide you from pre-approval to settlement - stress-free. Call us at 0457 531 124 to get started.



#1. Not Getting Pre-Approved First

Securing a home loan pre-approval shows you’re a serious buyer and gives you a clear price range. Pre-approval helps sellers see that your finances are in order, which can strengthen your negotiation position. 

Many confuse pre-approval with pre-qualification, but they’re not the same. Pre-qualification is only an estimate, while pre-approval is a conditional loan commitment from the lender.

#2. Underestimating All the Costs

Beyond the deposit and home loan, there are several hidden costs that first home buyers often overlook. These include mortgage registration fees, Lenders Mortgage Insurance (LMI), building inspections, stamp duty, and ongoing strata or body corporate fees. 

Make sure to factor in moving expenses, council rates, insurance, and possible renovations. A detailed budget with all possible expenses can prevent last-minute financial surprises.

#3. Shopping for Homes Before Setting a Budget

Falling in love with a home before knowing your borrowing power often leads to disappointment. Viewing properties beyond your price range can distort your expectations. Use online calculators and consult a mortgage broker to determine what monthly mortgage repayments you can comfortably afford. Always include a buffer for unexpected costs.

#4. Ignoring First Home Buyer Grants and Incentives

There are several support programs available for eligible first home buyers in NSW, including the First Home Guarantee scheme and First Home Buyer Assistance Scheme. These can significantly reduce your upfront costs. 

Visit official government websites or consult with a mortgage broker to find out what you qualify for. Missing out on these opportunities can mean paying thousands more than necessary.

#5. Not Comparing Mortgage Options

Choosing the first lender you speak to is rarely the best move. Interest rates, loan features, and repayment flexibility can vary widely between lenders. A mortgage broker can help compare options and find one that suits your financial goals. 

Understand the differences between fixed and variable loans. Fixed loans offer stability, while variable loans may have lower initial rates but change over time.

#6. Skipping the Home Inspection

Skipping building and pest inspections to save money is a risky move. Inspections uncover hidden issues such as structural damage, plumbing problems, or pest infestations. Building & Pest Inspections typically cost a few hundred dollars but can save you thousands. Always ask for an inspection report before committing to the contract of sale.

#7. Letting Emotions Drive Decisions

Emotions can cloud judgment, especially when you've fallen in love with a home. Bidding wars, fear of missing out, or visual appeal of a home style can push buyers to overpay. Stay grounded by sticking to your budget, reviewing inspection costs, and taking time to consider each offer. A logical approach prevents buyer’s remorse.

#8. Focusing Only on the House, Not the Location

A beautiful home in the wrong location can be a poor investment. Research the neighbourhood's schools, public transport, crime rates, and proximity to work. In Wollongong, suburbs like Figtree, Corrimal, and Woonona have seen strong demand due to family-friendly environments and good resale value. Always consider lifestyle, commute times, and long-term potential when assessing a property.

#9. Overstretching the Budget

Many first home buyers push their budget to the limit, only to face financial stress later. Lenders Mortgage Insurance kicks in when deposits are under 20%, adding more to your loan. If mortgage repayments leave little room for savings or emergencies, it may not be the right choice. Aim for a comfortable repayment range, allowing for life’s uncertainties and future expenses.

#10. Not Using a Mortgage Broker

A mortgage broker connects you with lenders and helps match you to a home loan that fits your needs. Many first home buyers only approach their bank, missing better deals elsewhere. Brokers compare loan options, handle paperwork, and explain lender requirements. In a fast-moving market like Wollongong, working with a broker can save you time, money, and stress.

 Local Brokers, Real Results for Wollongong First Home Buyers. Buying in Wollongong or the wider NSW? SimpleFin’s local team knows the area and the lenders. Our Wollongong mortgage brokers will guide you through the full loan process and help you sidestep common first home buyer pitfalls. Call 0457 531 124 and book a free consultation with us today. 

FAQs

What’s the difference between pre-approval and pre-qualification?

Pre-approval is a conditional commitment from a lender, while pre-qualification is only an estimate based on basic financial information.

Do I need a home inspection if the property looks fine?

Yes, building and pest inspections can reveal hidden issues not visible during open homes.

How much deposit do I need to avoid Lenders Mortgage Insurance?

You typically need a 20% deposit. Otherwise, LMI may apply.

What government schemes are available for first home buyers in NSW?

You may be eligible for the First Home Guarantee scheme or stamp duty exemptions under the First Home Buyer Assistance Scheme.

Wrapping Up

Buying your first home is an exciting milestone, but avoiding common first home buyers mistakes can make the journey far smoother and more rewarding. From understanding all the costs involved to choosing the right loan, each decision plays a role in your long-term financial well-being. 

If you’re planning to buy property in Wollongong or anywhere in NSW, our Wollongong mortgage brokers at SimpleFin can help you make confident, informed loan choices. Ready to get started? Book a free consultation by calling 0457 531 124 to speak with a local expert who understands the challenges first home buyers face - and how to overcome them.