What Not to Do When Preparing for Your First Property

Most first home buyers in Cronulla start looking at properties before they have any idea what they can borrow or what a lender will actually approve.

That approach costs you time, deposit strength, and sometimes the property itself. Preparation means knowing your borrowing capacity, building a deposit that survives scrutiny, and structuring your application so it clears conditional approval without drama. Do that work before you start attending open homes, and you are weeks ahead of buyers who think pre-approval is something you get after you find a property you like.

Running Down Your Savings While You Search

Your deposit needs to show genuine savings held for at least three months. Lenders verify this by reviewing your transaction history, and they will ask about any unusual deposits, withdrawals, or transfers that appear during that period.

Consider a buyer who had been setting aside income consistently but made a large withdrawal to pay for a holiday six weeks before applying for pre-approval. The lender required a statutory declaration explaining the withdrawal and reduced the amount they would accept as genuine savings. The buyer had to wait another two months to rebuild the three-month history, delaying the purchase and missing the property they had made an offer on.

If you are planning to buy in the next six months, treat your savings account as untouchable. Set up a separate account for everyday spending and leave your deposit funds where they are. Lenders want to see consistency, not just a final balance.

Changing Jobs Without Understanding the Timing

Lenders assess income stability as part of every home loan application. If you are in a probationary period, most lenders will not proceed until you have completed it and provided confirmation of ongoing employment.

We regularly see buyers who accept a new role thinking it will strengthen their application because the salary is higher. It does the opposite if you have not finished probation. A buyer on a casual contract moved to a permanent role with a higher base salary but was still within the first three months when they applied. The lender declined to assess the new income and based borrowing capacity on the previous 12 months of casual earnings, which were lower and inconsistent. The buyer could not settle on the property they had exchanged on and had to renegotiate the contract.

If you are considering a job change, wait until after you have settled. If the change has already happened, speak to a broker before you start looking at properties so you know what income the lender will actually use.

Applying for Credit in the Months Before You Buy

Every credit application you make appears on your credit file, and every open account with a limit reduces your borrowing capacity. Lenders assume you could draw down the full limit on every card and personal loan you hold, regardless of whether you use it.

A buy now pay later account with a spending limit, a new credit card for points, or a small personal loan for a car all affect what you can borrow. In one scenario, a buyer applied for a $10,000 credit card three months before their home loan application. They never used the card, but the lender reduced their borrowing capacity by around $50,000 because of the potential repayment obligation. The buyer had to close the card and wait for the closure to be reflected on their credit file before the lender would reassess.

Check your credit file now using a service that pulls your report from Equifax, Experian, or Illion. If you have accounts you do not use, close them and get written confirmation. Do not apply for any new credit until after you have settled on your property.

Relying on Family Help Without Documentation

A gifted deposit is a legitimate source of funds, but it needs to be declared and documented correctly. Lenders require a signed gift letter from the person providing the funds, proof of their ability to gift that amount, and evidence that the funds have been transferred into your account.

The letter must state that the funds are a genuine gift with no obligation to repay. If the funds are described as a loan, or if the documentation is unclear, the lender will treat it as a liability and reduce your borrowing capacity accordingly.

Buyers often receive cash or transfers without keeping records, or they mix gifted funds with their own savings in a way that makes it difficult to trace the source. That creates delays during the assessment process and sometimes results in the lender rejecting part of the deposit. If you are receiving help from family, arrange the transfer early, keep all records, and have the gift letter prepared before you lodge your application.

Misunderstanding What the 5% Deposit Scheme Covers

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying lenders mortgage insurance. The scheme does not cover your other upfront costs.

You still need to budget for conveyancing, building and pest inspections, strata reports if you are buying a unit, council and water adjustments, and loan establishment fees. Depending on the property, those costs can add another $8,000 to $12,000 to what you need at settlement.

Buyers sometimes calculate their deposit at 5% of the purchase price and assume that is all they need in their account. When their conveyancer sends the settlement statement, they realise they are short. If you are relying on the scheme, add at least $10,000 to your deposit target for costs outside the property price.

Skipping the Conversation About Loan Structure

First home buyers often focus on approval and ignore the loan structure until after they have settled. That means you could end up with a variable rate loan and no offset account when a split structure would have given you more control over repayments and interest costs.

An offset account linked to your variable portion lets you park savings and reduce the interest charged without locking the funds away. A fixed portion gives you certainty on part of your repayment for a set term. Splitting your loan between the two gives you both benefits, but it has to be structured at application, not after settlement.

Lenders also vary in the features they offer and the interest rate discounts available depending on your deposit size and loan-to-value ratio. If you are using a 10% deposit instead of 5%, you may have access to a wider panel of lenders and lower rates. Talk through your options with a broker before you apply so the loan structure matches how you plan to manage repayments, not just what gets you across the line.

Waiting Until After You Find a Property to Get Pre-Approval

Pre-approval tells you what you can borrow, what deposit you need, and whether your income and credit file will support a formal application. It also shows selling agents and vendors that you are in a position to proceed if your offer is accepted.

Buyers who wait until they find a property often discover they cannot borrow as much as they thought, or that their deposit does not meet the lender's requirements for genuine savings. At that point, you are trying to fix your application while negotiating a contract, and you have no buffer if the lender asks for additional documentation or declines the application.

Cronulla's median unit prices sit around the lower to mid range compared to neighbouring Sutherland Shire areas, but competition is strong, particularly for properties close to the beach and transport. Buyers with conditional approval in place can move faster and negotiate with more confidence than those who are still working out whether they can even settle.

Get your borrowing capacity assessed, gather your documentation, and secure conditional approval before you start attending opens. That way, when you find something that works, you are ready.

Call one of our team or book an appointment at a time that works for you. We will walk through your deposit, income, and credit position, identify anything that needs attention, and structure your application so it reflects what you can actually borrow and what you will pay once you settle.

Frequently Asked Questions