Why Should First Home Buyers Plan Before Searching?

Know Your Numbers Before You Know Your Suburb

Understanding what you can borrow and what you can afford are two different conversations. A lender might approve you for $650,000, but if that means every dollar of your income disappears into repayments and you're left with nothing for the life you actually want to live, the approval is worthless. Start with your current spending. Look at three months of bank statements and add up what goes out the door each week on groceries, fuel, insurance, subscriptions, and the occasional meal out. Then add a margin for the unexpected, because something always comes up. The figure that's left after all of that is what you have available for a mortgage, and it's a better starting point than any online calculator.

Consider a medical resident working at Peninsula Health who earns $90,000 a year and has $50,000 saved. On paper, borrowing capacity might sit around $500,000 to $550,000 depending on other debts and expenses. But if this buyer wants to keep contributing to super, maintain a car, and have enough left over for a decent coffee on the way to a shift, the comfortable repayment level might only support a $450,000 loan. That's the number that matters, not the one the lender says is possible.

What Concessions Actually Apply in Victoria

Victoria offers a full stamp duty exemption on properties up to $600,000 and a sliding concession from $600,001 to $750,000. The First Home Owner Grant of $10,000 applies only to new homes valued up to $750,000. If you're buying an established home in Frankston, the grant doesn't apply, but the stamp duty concession does. An established home purchased for $580,000 would attract no stamp duty at all. A home purchased for $680,000 would attract a reduced duty amount under the concession. Above $750,000, standard duty rates apply and you're paying the full cost.

These concessions make a material difference to how much cash you need at settlement. A $30,000 stamp duty bill that disappears because of an exemption means $30,000 less you need to find from savings or borrow from family. But the concession only applies if the property will be your principal place of residence, and you need to move in within 12 months of settlement and live there for at least 12 continuous months. If you're planning to rent the place out or let a sibling live there while you stay elsewhere, the concession doesn't apply.

Borrowing Power and Deposit Options

Your deposit size determines whether you'll pay Lenders Mortgage Insurance and how much it will cost. A 20% deposit avoids LMI entirely. Anything less than 20% and LMI applies, unless you're using the Australian Government 5% Deposit Scheme. Under that scheme, eligible first home buyers can purchase with a 5% deposit and Housing Australia guarantees the shortfall, which means no LMI. There's no income cap and no annual limit on the number of approvals. The property price cap in Melbourne is $950,000, so the scheme covers most of Frankston.

If you're putting down 10% without the government scheme, expect LMI to add anywhere from $8,000 to $20,000 depending on the loan size and lender. Some lenders let you capitalise the LMI into the loan, which means you're not paying it upfront but you are paying interest on it for the life of the loan. Others require it paid at settlement. If you're planning to use a gifted deposit from a parent or family member, most lenders accept it as long as it comes with a signed declaration that it's a genuine gift and not a loan that needs to be repaid. The lender will want to see the money in your account and a paper trail showing where it came from.

What Pre-Approval Actually Tells You

Pre-approval is not a guarantee, but it does tell you that a lender has reviewed your income, debts, and expenses and is willing in principle to lend you a certain amount. It gives you a realistic price range to work within and shows real estate agents and sellers that you're a serious buyer with finance already lined up. Pre-approval typically lasts three to six months depending on the lender, and it's conditional, meaning the lender will still need to see and value the actual property before final approval.

Getting pre-approval before you start inspecting properties means you're not wasting time looking at homes you can't afford or making offers you can't settle. It also means you understand your borrowing capacity and can move quickly when the right property comes up. In a suburb like Frankston, where stock can move within a week or two if it's priced right and close to the beach or station, having your finance sorted in advance makes the difference between securing the property and watching someone else sign the contract.

Fixed or Variable and Why It Matters Now

A variable interest rate moves with the market, which means your repayments can go up or down depending on what the Reserve Bank and your lender decide to do. A fixed interest rate locks in your repayment amount for a set period, usually one to five years, which gives you certainty but removes flexibility. Most lenders let you split your loan, fixing part and leaving part variable, so you get some certainty and some flexibility.

If you're buying at the top of your borrowing capacity and there's no room in your budget for repayments to increase, fixing at least part of the loan makes sense. If you're borrowing comfortably below your limit and you want the flexibility of an offset account or the ability to make extra repayments without penalty, a variable rate or a split might suit you better. Variable loans usually come with offset accounts, which let you park your savings in a linked account and reduce the interest you pay without locking the money away. Fixed loans generally don't offer offset accounts, and if you want to make extra repayments above a certain threshold or exit the loan early, break costs can apply.

The Documents You'll Need and When

Lenders want to see proof of income, proof of savings, and proof of identity. If you're a salaried employee, that means recent payslips, a letter from your employer, and your last two years of tax returns or notices of assessment. If you're a contractor, locum, or business owner, expect to provide full financials including tax returns, business activity statements, and sometimes a letter from your accountant. Savings need to show genuine savings, meaning money that's been in your account for at least three months. A one-off deposit from a tax refund or sale of assets might not count unless it's been sitting there long enough to demonstrate a pattern.

You'll also need to provide statements for any other debts like car loans, personal loans, or credit cards, even if the balance is zero. Lenders assess your borrowing capacity based on the limits of those accounts, not just what you owe, so a credit card with a $15,000 limit reduces your borrowing power even if you pay it off in full every month. If you're not using it, close it before you apply. If you're planning to buy in the next six months, don't apply for new credit, don't change jobs unless you have to, and don't make any large unexplained deposits or withdrawals that will raise questions when the lender reviews your statements.

Why Medical Professionals in Frankston Have Extra Options

Some lenders offer specific home loan options for medical professionals that waive or reduce LMI even on higher loan-to-value ratios. A doctor, dentist, or specialist buying with a 10% deposit might avoid paying LMI altogether under one of these programs, which can save tens of thousands of dollars. The rationale is that medical professionals have stable, above-average incomes and low default rates, so lenders are willing to take on more risk without requiring insurance.

If you're a GP working at a local practice near Frankston Hospital or a specialist at a private clinic in the area, it's worth asking whether your lender has a professional package that applies to your situation. Not all lenders offer them, and the ones that do have different eligibility criteria, but the saving can be significant. Even if LMI isn't waived entirely, the rate might be lower than the standard calculation, which still makes a difference at settlement.

When to Involve a Broker and What to Ask

A mortgage broker works with multiple lenders and can show you what each one offers, how they assess your income and expenses, and which one is most likely to approve your application at the rate and loan amount you need. Brokers also handle the paperwork, liaise with the lender, and manage the process through to settlement. If you're time-poor, self-employed, or your income structure is complicated, a broker saves you from applying to lenders one at a time and hoping for the outcome you need.

When you sit down with a broker, bring your recent payslips, bank statements, and a list of your debts and expenses. Be upfront about your situation, including anything that might complicate the application like previous defaults, a recent job change, or irregular income. The more a broker knows at the start, the less likely you are to hit a roadblock halfway through. Ask how many lenders they work with, whether they charge a fee or are paid by the lender, and what happens if your circumstances change between pre-approval and settlement. A good broker will walk you through the entire timeline and tell you exactly what to expect at each stage, so there are no surprises when you're a week out from signing the contract.

Call one of our team or book an appointment at a time that works for you. We'll walk through your numbers, show you what's available, and make sure you're set up properly before you start looking at properties.

Frequently Asked Questions