Top Strategies to Avoid First Home Buyer Mistakes

Borrowing at Full Capacity Without Testing for Rate Movement

Borrowing the maximum amount a lender will approve leaves no buffer when interest rates rise or your practice expenses increase.

Consider an endodontist who borrows $850,000 at current variable rates on a property valued at the scheme's upper limit. At assessment rates, the monthly repayment sits comfortably within serviceability. Six months after settlement, the Reserve Bank lifts rates twice. The repayment jumps by $680 per month. At the same time, a piece of specialist equipment needs replacing earlier than planned. The combination creates pressure that wouldn't exist if the initial borrowing sat $100,000 lower. Borrowing capacity and what you should borrow are different calculations. Lenders assess your ability to service debt at a higher rate than the actual rate you'll pay initially, but that buffer can disappear quickly if your circumstances shift. Endodontists often have variable income depending on referral patterns and case complexity, so leaving room in your budget for leaner months protects your repayment consistency.

Skipping Pre-Approval and Shopping Without a Funding Ceiling

Starting your property search without getting loan pre-approval means you're looking at homes you may not be able to finance.

Pre-approval confirms your borrowing limit, clarifies which loan features are available to you, and signals to agents that you're a serious buyer. In competitive markets, agents prioritise buyers who can demonstrate funding is already arranged. A conditional pre-approval typically lasts 90 days and is subject to property valuation and final credit assessment, but it gives you a definitive ceiling before you attend a single inspection. For endodontists, pre-approval also allows your broker to confirm whether your employment structure, whether as an associate, contractor, or practice owner, has been assessed correctly by the lender. Income verification for specialists can differ between lenders, and identifying the right panel early avoids delays when you're ready to make an offer.

Ignoring Lenders Mortgage Insurance When Comparing Low Deposit Options

LMI is a one-off premium charged when your deposit is below 20%, and the cost varies significantly depending on your deposit size, loan amount, and lender.

Many endodontists qualify for LMI waivers for dentists or discounted premiums through profession-specific lending policies. A 10% deposit on an $800,000 property might attract an LMI premium of $18,000 to $24,000 with a standard lender, but the same loan with a lender offering a professional package could reduce that premium to nil. The waiver isn't automatic. It depends on your qualifications, registration status, and sometimes your years of practice. If you don't qualify for a waiver, comparing LMI premiums between lenders becomes essential. Some lenders calculate LMI on a higher loan-to-value ratio than others, even at the same deposit percentage. The difference in premium can exceed $5,000 on the same loan amount, which is capitalised into your loan and paid off over 30 years with interest.

You can also access the Australian Government 5% Deposit Scheme, which removes LMI entirely by replacing it with a government guarantee. The scheme has no income cap and applies to properties up to the relevant price threshold for your location. Combining the scheme with applicable state or territory concessions can reduce your upfront costs substantially, but not all lenders participate in the scheme, so your broker will need to confirm which panel members can offer it.

Choosing Loan Features Based on Popularity Rather Than How You'll Use the Loan

Offset accounts and redraw facilities both reduce interest, but they work differently and suit different repayment behaviours.

An offset account is a separate transaction account linked to your loan. The balance in the offset reduces the amount of principal on which interest is calculated. If you have a $700,000 loan and $40,000 sitting in a full offset account, you only pay interest on $660,000. The cash in the offset remains accessible at all times. Redraw allows you to make extra repayments directly into the loan and withdraw those extra funds later if needed, but access isn't always instant and some lenders restrict the number of redraws per year or charge fees.

For endodontists who maintain an operating buffer for professional indemnity renewals, registration fees, or equipment purchases, an offset account keeps that cash accessible without sacrificing the interest saving. If you're unlikely to need access to extra repayments once made, redraw may be sufficient and some lenders offer slightly lower rates on loans without offset. The decision depends on your cash flow pattern, not on which feature is mentioned more often in online forums.

Locking in a Fixed Rate Without Understanding Break Costs

A fixed interest rate gives you repayment certainty, but exiting the fixed period early can trigger break costs that run into thousands of dollars.

Break costs are calculated based on the difference between the rate you fixed at and the rate the lender can now lend that money at for the remaining fixed period. If you fixed at 5.8% for three years and rates have since fallen to 5.2%, the lender loses income by releasing you early. You pay the difference. The calculation is opaque and varies by lender, but a common scenario is selling the property or refinancing during the fixed term. In a rising rate environment, break costs are often minimal or nil because the lender can re-lend at a higher rate. In a falling rate environment, break costs can exceed $10,000 on a $700,000 loan with two years remaining.

Splitting your loan between fixed and variable portions reduces this risk. You get partial rate protection on the fixed portion and flexibility on the variable portion, which can be paid down or refinanced without penalty. The split doesn't need to be 50/50. Many endodontists fix 60% to cover essential repayments and leave 40% variable to absorb extra repayments from higher-income months.

Misunderstanding Stamp Duty Concessions and Missing the Application Deadline

First home buyer stamp duty concessions can save you tens of thousands, but the eligibility rules differ by state and the concession must be claimed correctly at settlement.

In New South Wales, the First Home Buyers Assistance Scheme provides a full transfer duty exemption on homes valued up to $800,000 and a sliding concession on properties between $800,001 and $1,000,000. In Victoria, the exemption applies to properties up to $600,000 with a concession up to $750,000. Queensland offers a different structure depending on whether the home is new or established. For new homes and vacant land purchased from 1 May 2025, eligible first home buyers pay no stamp duty regardless of price. For established homes, a concession reduces the duty payable but doesn't eliminate it entirely.

The concession is not applied automatically. Your conveyancer or solicitor lodges the application with the state revenue office, and you must meet occupancy requirements after settlement. Typically, you need to move into the property within 12 months and live there as your principal place of residence for a continuous period, which is 12 months in most jurisdictions. If you fail to meet the occupancy condition, the concession is clawed back and you'll be required to pay the full duty amount plus interest. This is relevant for endodontists who may be considering relocation for a specialist position or fellowship. If there's any chance you won't occupy the property for the required period, the concession should not be claimed.

Treating Deposit Funds and Genuine Savings as Interchangeable

Most lenders require at least 5% of your deposit to come from genuine savings, meaning funds you've accumulated over time in your own account.

Genuine savings are typically demonstrated by bank statements showing a consistent balance held for at least three months. Lenders want evidence that you can manage money and build a buffer, not just access a lump sum from a single source. A gift from a parent, a tax refund, or a bonus payment can form part of your deposit, but most lenders won't count those as genuine savings unless the funds have been held in your account for the required period. If you're using a 5% deposit under the Australian Government scheme, the 5% must still meet the lender's genuine savings criteria unless the lender's policy explicitly allows an exception for professionals.

Some lenders relax genuine savings requirements for endodontists and other dental specialists, particularly those with stable employment contracts or established referral networks. Your broker will confirm whether your deposit structure is acceptable to the lender before you make an offer, because finding out at credit assessment that your deposit doesn't meet policy can derail a purchase that's already progressed to contract.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions