5 mistakes keeping Aussies from owning homes
A few persistent myths can make the process of buying a home harder than it is, according to NAB’s executive for home lending Denton Pugh.
Thousands of renters could buy right now but don’t realise it, according to a major bank’s lending boss who reveals costly errors stopping them from getting their own keys.
National Australia Bank executive for home lending, Denton Pugh, shares the red flags to look out for and how to overcome them.
It’s understandable that buying a home can feel overwhelming.
By Denton Pugh
Buying your first home has never been a casual decision. And right now, with interest rates higher and more competition, it’s understandable if it feels a bit overwhelming.
There’s also no shortage of advice. Friends, family, TikTok, and group chats all have strong views about what you should and shouldn’t do before buying. Some of it is helpful, and some of it simply isn’t true.
Alongside the very real financial hurdles, a few persistent myths can make the process feel harder than it needs to be. Here are five worth taking a closer look at.
Myth 1: You always need a 20 per cent deposit
A 20 per cent deposit can help you avoid paying lenders mortgage insurance (LMI), but it is not a universal requirement.
Under the Federal Government’s Home Guarantee Scheme, eligible first home buyers may be able to purchase with as little as a 5 per cent deposit without paying LMI. That can significantly reduce the upfront hurdle and bring forward a purchase that might otherwise feel years away.
Waiting until you have saved 20 per cent is not the only pathway into the market. Understanding your options early can help you make a more informed decision about when you can buy your first home.
NAB executive for home lending Denton Pugh.
Myth 2: An offset account is just a nice extra
When rates are rising, every dollar counts. Many buyers focus solely on the advertised interest rate, but how your loan is structured can matter just as much over time.
An offset account links your savings to your home loan, reducing the balance on which you pay interest. Even modest savings sitting in an offset can reduce the total interest paid over the life of the loan.
For buyers who want to keep an emergency fund or save for future expenses, an offset account can provide flexibility while still helping manage interest costs.
Myth 3: If I rent out a room, I’ll lose my first home benefits
This one often surprises people. In many cases, living in your property as your main residence while renting out a spare room does not automatically mean you lose access to first homebuyer benefits such as the First Homeowner Grant or stamp duty concessions. Rules vary by state and there are conditions, but the idea that you cannot have a housemate at all is often misunderstood.
The key is understanding the eligibility requirements and ensuring the property remains your principal place of residence.
There are tools like offset accounts that can make life easier while paying off a mortgage.
Myth 4: Stamp duty is the only cost to think about
Stamp duty is often the largest upfront cost after the deposit, but it is not the only one.
Other costs can include legal and conveyancing fees, building and pest inspections, loan application or settlement fees, and moving expenses. And don’t forget strata fees if you’re buying a townhouse or apartment. These should be factored into your budget from the start.
The good news is that many first home buyers may be eligible for stamp duty concessions or exemptions, depending on the state and the property value.
What matters most is budgeting for the full picture, not just the headline purchase price. In a higher rate environment, building in a buffer for unexpected costs is even more important. It can provide breathing room if repayments rise or other expenses change.
Stamp duty is not the only consideration when it comes to costs, do your research well.
Myth 5: You need a perfect credit score
A less than perfect credit score stops many would be buyers before they even speak to a lender.
While a strong credit history helps, it is not the only factor considered. Lenders also look at your income and employment stability, savings, whether you pay bills on time, and how much existing debt you carry.
If your credit history is not flawless, that does not automatically mean the door is closed. Taking steps such as paying bills on time, reducing credit card balances and checking your credit report early can make a real difference.
Buying your first home is financially challenging, particularly when there’s competition in the market. Understanding deposits, upfront costs, loan features and eligibility rules will not make homes cheaper. What it can do is help you approach the process with clearer expectations, stronger preparation and fewer surprises.
