First Home Buyers: Don't Accept the Bank's Default Loan

The Default Loan Is the Cheap Boots

When you walk into a bank as a first home buyer, they'll offer you the simplest option — low rate, no bells and whistles. It looks attractive. But like cheap boots that wear out in a year, it costs you more over time.

Better loan structures exist. Offset accounts, flexible repayment options, free redraw — these features can save you a fortune. But the bank won't recommend them unless you know to ask.

What to Ask For

Offset account: Every dollar in your offset reduces the balance your interest is calculated on. Even if you're just starting out with a small salary flowing through, it adds up.

Flexible repayment frequency: Match your repayments to your pay cycle. If you're paid fortnightly, pay the mortgage fortnightly.

Free unlimited redraw: If you make extra payments, you want to be able to access that money without fees or delays.

No penalty for extra repayments: Some loans (especially fixed rate) cap how much extra you can pay per year. Make sure your loan doesn't punish you for getting ahead.

Think About the Future

Here's something most first home buyers don't consider: will this property ever become a rental? If you upgrade in five years and keep this property as an investment, the way you've structured your loan matters enormously for tax.

With an offset account, you can save interest now without reducing the actual loan balance. When the property becomes an investment, your full loan balance remains tax-deductible. With redraw, the tax office treats extra repayments as permanent reductions — and you can't claim the full interest.

Planning for this now costs nothing and could save you thousands in tax down the track.

Get Independent Advice

A bank employee sells their bank's products. A mortgage broker compares products across dozens of lenders to find what works for you. If you're about to make the biggest financial commitment of your life, get advice from someone who's on your side.