Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Why is going direct to my bank a mistake?
Going direct to one bank means you see one set of products at one set of rates. That bank will never tell you a competitor has a better offer. Brokers compare 30 to 60+ lenders. Data consistently shows broker clients get lower rates than direct-to-bank clients.
On a $800,000 loan, even 0.3% lower saves $2,400 per year. Over 30 years, that is $72,000. Your bank's loyalty does not extend to voluntarily giving you the best rate available in the market. A broker's job is to find that rate for you, and the service costs you nothing because lenders pay the broker, not you.
How do unused credit cards affect my home loan?
Every credit card you hold reduces your borrowing power by approximately 3x the credit limit, even if the balance is zero. A $20,000 limit card you never use reduces your borrowing power by roughly $60,000. Two cards with $15,000 limits each cost you $90,000 in borrowing capacity.
Lenders assess your credit card limit as a fully drawn liability. They assume you could max it out at any time. The fix is simple: close every card you do not actively need before applying. If you need a card for business expenses, reduce the limit to the minimum required. This single step has helped clients qualify for loans they were previously being declined for.
What happens if I do not get pre-approval before house hunting?
You risk falling in love with a property you cannot afford, or worse, making an offer and then discovering your finance is declined. Pre-approval gives you a clear borrowing limit and makes you a stronger buyer at auction or negotiation.
It typically takes 1 to 5 business days and costs nothing through a broker. Sellers and agents take pre-approved buyers more seriously. At auction, pre-approval means you can bid with confidence up to your limit. Without it, you are guessing, and that guess could cost you the property or put you in a contract you cannot settle.
Why is choosing the lowest rate not always the best decision?
A loan at 5.89% with a free offset account can save you more than a loan at 5.79% without one. A $50,000 balance in an offset account on a $800,000 loan saves approximately $3,000 per year in interest. Features matter: offset accounts, redraw facilities, extra repayment flexibility, and portability can all be worth more than a marginal rate difference.
Some of the lowest advertised rates come with annual fees, no offset, limited extra repayment allowances, or clawback penalties. The total cost of a loan over its lifetime includes far more than just the headline rate. Always compare the comparison rate and the full feature set before choosing.
How does the wrong loan structure cost investors money?
Investment loan interest is tax-deductible. Home loan interest is not. If you pay down your investment loan while keeping a large home loan balance, you are eliminating deductible debt and keeping non-deductible debt. Over a portfolio lifetime, this can cost $100,000 or more in unnecessary tax.
The correct structure: pay minimum on the investment loan (or use interest-only), direct all extra repayments to the home loan, and use an offset account linked to the investment loan to park surplus cash. This keeps your deductible debt high while reducing your non-deductible debt as fast as possible. Getting this wrong from day one is expensive to unwind later.
Why should I not make large purchases before applying for a home loan?
A new car loan, furniture on afterpay, or a large credit card purchase all reduce your borrowing power. Lenders look at your committed expenses. A $500 per month car repayment reduces your borrowing capacity by approximately $75,000.
If you are planning to apply for a home loan in the next 3 to 6 months, avoid taking on any new debt. This includes buy-now-pay-later services, personal loans, and increasing credit card limits. Even a $50 per week afterpay commitment reduces your borrowing power. Buy the furniture after settlement, not before.
Is fixing my entire loan a mistake?
Fixing your entire loan means you cannot make extra repayments (or only limited amounts) without paying break costs. You also cannot access an offset account on most fixed loans. If rates drop or your circumstances change, you are locked in.
A better approach for most borrowers: split the loan. Fix 50 to 70% for rate certainty, keep 30 to 50% variable with an offset account for flexibility. This gives you the best of both worlds. You get the security of knowing most of your repayment is locked in, while retaining the ability to make extra repayments and access your offset on the variable portion.
Why is not reading the fine print on cashback offers dangerous?
Some lenders offer $2,000 to $4,000 cashback to attract refinancers. But the cashback may come with a higher rate, clawback provisions (if you refinance again within 2 to 4 years, you repay the cashback), or fewer features.
A $3,000 cashback on a loan that is 0.2% higher than the best available rate costs you $1,600 per year on a $800,000 loan. After 2 years, you have lost money. Always calculate the total cost over 3 to 5 years, not just the upfront incentive. The cashback is designed to distract you from the ongoing cost.
How does changing jobs affect my home loan application?
Lenders want to see stable employment. Changing jobs during the application process can delay or derail your approval, especially if you move from permanent to contract or from PAYG to self-employed.
If you are planning to change jobs, either complete your home loan application first or wait until you have passed probation at the new employer (typically 3 to 6 months). Some lenders are more flexible than others on probation periods, which is another reason to use a broker who knows which lenders will work with your situation.
Why do people forget about ongoing costs after buying?
The mortgage repayment is not the only cost. Council rates ($1,500 to $4,000/yr), water rates ($700 to $1,200/yr), strata levies ($2,000 to $12,000+/yr for apartments), building insurance ($1,000 to $3,000/yr), and maintenance (budget 1% of property value per year) all add up.
A $1,000,000 property can have $15,000 to $25,000 in annual holding costs beyond the mortgage. Factor these in before you buy. Too many borrowers stretch to the absolute maximum loan amount without accounting for these costs, then find themselves under financial pressure within the first year of ownership.
The single most expensive mistake I see is borrowers who never review their home loan after settlement. Your bank will not call you to offer a lower rate. I have clients who were paying 6.49% for three years because they assumed the bank was looking after them. A 20-minute rate review could have saved them $12,000 per year. If you have not reviewed your loan in the last 12 months, you are almost certainly overpaying.
