First Home Buyer Auction Checklist: Finance Before Bidding

Pre-approval is not final approval

Pre-approval generally assesses your finances at a point in time and gives an indicative lending limit. Before final approval, the lender may still need to assess the property, complete its valuation, confirm your documents and check that nothing material has changed in your circumstances.

Do not assume that a pre-approval for $700,000 means every $700,000 property will be acceptable security or that your entire cash balance can be used as the deposit.

• Your income, employment, expenses and existing debts still need to remain consistent with your application.
• The property may be assessed differently depending on its type, condition, location, size, zoning or strata position.
• A lender valuation below the purchase price can change the amount you need to contribute from your own funds.

1. Confirm the loan amount available for this purchase

Ask your broker or lender to confirm the current maximum loan amount, the expiry date of your pre-approval and any outstanding conditions. Then ask whether the specific property raises any lending concerns.

This is particularly important for apartments, small dwellings, unusual titles, properties with large repairs required, rural-residential homes, company-title properties or homes with significant strata issues.

• What is the maximum loan amount currently supported by my application?
• Does my pre-approval expire before the expected settlement date?
• Are there documents, payslips, statements or other conditions still outstanding?
• Is this property type and location within the lender’s policy?
• Are there any minimum-size, zoning, occupancy or strata restrictions that may matter?

2. Confirm your cash contribution

Your savings do more than cover the auction deposit. They may also need to cover transfer duty or stamp duty, legal costs, inspections, lender fees, any applicable LMI, settlement adjustments and moving costs.

The cash you have available is not automatically the cash you should put into the purchase. Retaining a sensible buffer can help you manage unexpected settlement costs, urgent repairs or changes in your income after moving in.

• Total verified savings available now
• Funds already committed to other purposes
• First home buyer concession or scheme position
• Estimated purchase and settlement costs
• A retained cash buffer that you are comfortable keeping after settlement

3. Confirm the auction deposit mechanics

Find out the required deposit percentage, when it is due and how the selling agent will accept payment. A 10% deposit is common in many auctions, but the contract and auction conditions set the actual requirement.

The deposit is usually part of your overall contribution to the purchase price. Even so, you need to be able to deliver it in the required form and on the required day. Do not assume your lender will provide auction-day deposit funds.

• Exact deposit amount at your proposed maximum bid
• Accepted payment method, such as electronic transfer, bank cheque or deposit bond
• Daily bank transfer limit and the process to increase it if needed
• Who will make the payment if you are bidding jointly
• Whether a different deposit amount or timing has been agreed in writing before the auction

4. Confirm your first home buyer pathway

If your numbers rely on a first home buyer concession, government guarantee, shared-equity arrangement, family guarantee or another support pathway, check the current eligibility and purchase process before auction day.

Do not build your bidding plan around an incentive or contribution that has not been assessed for your circumstances and the property. Some pathways have property-price limits, owner-occupier requirements, timing requirements or purchasing conditions that may affect whether an auction is suitable.

• Eligibility has been checked against your current circumstances.
• The purchase price is within any applicable cap.
• The property meets relevant occupancy and property requirements.
• Any required approval can be obtained within the auction and settlement timetable.
• Your backup position is clear if the pathway is unavailable.

Build your number from the bottom up

Start with the amount the lender may advance, then add only the cash that is genuinely available for the purchase. Deduct every known or likely cost before deciding on your ceiling price.

If the calculation feels tight, use a lower bid limit. A limit that only works if every assumption is perfect is not a comfortable auction limit.

• Confirmed maximum loan amount
• Plus: usable cash contribution
• Less: transfer duty or stamp duty, if applicable
• Less: conveyancing, searches and inspection costs
• Less: lender fees and possible LMI
• Less: settlement adjustments and moving costs
• Less: your chosen emergency or home-repair buffer

Allow for valuation risk

The lender’s valuation may not match the price you are prepared to pay at auction. If the valuation is lower, the lender may base its loan amount on the lower figure rather than your winning bid. That can leave you needing to contribute more cash.

Ask your broker or lender whether the property and expected price range appear likely to create valuation risk. This is not a guarantee of the valuation outcome, but it can help you identify whether your bid ceiling needs more room.

• Are recent comparable sales supporting the likely auction range?
• Would a lower-than-expected valuation create a cash shortfall?
• How much additional cash could you contribute without exhausting your buffer?
• If the valuation is low, do you have a clear plan other than taking on unplanned debt?

Make your limit non-negotiable

Choose one final number and agree that it is the point where you stop. Do not set a public-facing “round number” and privately decide you might stretch past it in the moment.

Your limit should be based on the property’s value to you, the total purchase cost and your capacity to complete — not on competition, auction momentum or how long you have been searching.

• Write down: “My maximum bid is $____.”
• Tell your bidding partner or support person the figure before the auction begins.
• Decide who is authorised to bid and who can say no.
• Do not use a higher bid to avoid feeling disappointed in the moment.

Check the terms that affect your money and timing

Ask your legal representative to explain the settlement date, deposit terms, inclusions, exclusions, special conditions and any clauses that increase your risk. Confirm that the settlement period is workable for your lender and that you understand what happens if you cannot settle on time.

• Deposit percentage, due date and payment instructions
• Settlement date and whether your lender can work to it
• Included fixtures, chattels and any exclusions
• Special conditions or unusual obligations
• Title restrictions, easements, covenants or tenancy arrangements
• Strata levies, special levies, bylaws and relevant records for an apartment or townhouse

Complete property due diligence before bidding

At auction, you may not be able to rely on a building and pest inspection condition after you win. Arrange relevant checks early enough to consider the findings and update your maximum bid if needed.

Not every property needs the same reports. A freestanding home, apartment, older building, rural property and property with a pool can each present different risks. Your conveyancer, inspector and lender can help you identify what is relevant, but the decision to proceed remains yours.

• Building and pest inspection where relevant
• Strata report or records inspection where relevant
• Title and planning checks
• Pool, flood, bushfire, heritage or other location-specific checks
• A final review of repairs, maintenance and likely ongoing costs

If you are the successful bidder

Stay calm and follow the agreed process. Sign only after confirming the purchaser names are correct and the contract is the version your legal representative reviewed. Then complete the required deposit process and contact your broker or lender promptly.

Keep copies of everything you sign or pay. Your next steps will usually include formally progressing the loan, responding quickly to document requests and working with your conveyancer or solicitor towards settlement.

Get a pre-auction finance review

If you want an independent check of your auction readiness, Find A Better Rate can help you review your current pre-approval, likely cash contribution, purchase costs, lending options and questions to resolve before you bid.

Bring your proposed property, expected price range, savings position and auction date. The purpose is to help you bid with a clearer view of your finance position — or identify what needs attention before you make an unconditional commitment.