Are you a young professional dreaming of buying your first home in Melbourne, or looking to refinance your current mortgage for a better deal? You’re not alone. With property prices stabilising and interest rates still high but possibly headed downward, 2025 is a crucial year to get your home finances in order.
In this guide, we’ll walk through what first-home buyers need to know and how recent grads and young professionals can save money by refinancing. No complex jargon – just clear, mortgage broker-approved tips to help you get ahead in the Melbourne property market.
Navigating the Melbourne Market as a First-Home Buyer
Buying your first home can feel daunting, especially in a city like Melbourne. The good news? The market has cooled off slightly – housing values are more accessible than they were a year ago, giving first-home buyers a window of opportunity.
Here are a few key tips:
- Take Advantage of Grants & Schemes: As a Victorian first-home buyer, be sure to explore the First Home Owner Grant (currently A$10,000 for new builds in metro areas) and stamp duty concessions (potentially zero stamp duty for purchases under certain thresholds). These programs can save you tens of thousands, easing that upfront burden.
- Buy Within Your Budget (and Lifestyle): Calculate your comfortable price range before you start house-hunting. Remember, banks might approve a certain amount, but you need to consider your lifestyle. Use a borrowing power calculator to see what you can afford without living on two-minute noodles! Aim for repayments that won’t exceed ~30% of your take-home pay, a common rule of thumb for affordability.
- Get Pre-Approval Early: A loan pre-approval (sometimes called conditional approval) is like a dress rehearsal for your mortgage. It tells you how much the bank is willing to lend and puts you in a stronger position when you’re ready to make an offer. In Melbourne’s competitive market, sellers and agents will take you more seriously if you have financing ready to go.
- Consider “Rentvesting”: Can’t afford where you want to live? Consider rentvesting, which means renting in your preferred suburb and buying an investment property in a more affordable area. For example, you might rent an inner-city apartment but purchase a townhouse further out where prices are friendlier. The rent from your investment property (plus potential tax benefits like negative gearing) can help offset the mortgage. It’s an increasingly popular strategy for young professionals who want to get on the property ladder without sacrificing lifestyle.
- Boost Your Deposit Savings: Increasing your deposit doesn’t just reduce your loan size – if you can get to 20%, you’ll avoid Lenders Mortgage Insurance (LMI), which can save you thousands. To speed up your savings: set up an automatic transfer of a portion of your salary into a high-interest savings account, cut down on discretionary splurges (those daily $4 coffees add up to nearly $1,500 a year!), and consider moving back home for a short stint if that’s an option. Every extra dollar counts when you’re chasing that magic deposit number. (Fun fact: an average Melbourne household now needs around 6+ years to save a 20% deposit on a median house, so the more aggressive and disciplined you are with savings, the better.)
How (and When) to Refinance Your Home Loan
Refinancing isn’t just a buzzword – it’s a powerful way to save money, and many young homeowners are catching on. In fact, Australians are refinancing in record numbers (about $20 billion worth of loans were switched in a single month recently) as they hunt for better rates and lower payments. Here’s what you need to know about refinancing:
Why Refinance?
The main reason is to get a lower interest rate, which can reduce your monthly repayments and total interest cost. Lenders often give better rates to new customers – it’s called the “loyalty tax” when you stick with your bank and they don’t reward you. By shopping around, you might find a rate even 0.5% lower, which on a $500k loan could save you over $2,500 in interest in just the first year! Other reasons to refinance: to access equity (for a renovation, investment, or major expense), or to switch from a fixed to variable rate (or vice versa) if your needs changed.
When to Refinance
A good rule of thumb is to review your mortgage annually. If it’s been a couple of years since you looked at alternatives, you’re likely paying more than you need. Also, major life changes are triggers – a new job with higher income (you might now qualify for a better deal), addition of a partner’s income, or conversely, if expenses have gone up and you need to extend your loan term for relief. In 2025, with interest rates peaking and expected to slowly fall, many lenders are hungry for business – meaning it’s an excellent time to negotiate or refinance for a sharper rate.
How to Refinance Smartly
Start by comparing rates and features. Look beyond the headline rate; check fees, offset accounts, flexibility to make extra repayments, etc. You can use comparison websites or talk to a broker (like MoneyBar) who has access to dozens of lenders. Once you spot a promising loan, you’ll apply much like you did for your first loan – providing updated income, expense, and property details. Your new lender will handle closing out the old loan. Pro tip: Don’t cancel your existing loan until the new one is approved and ready to settle, to avoid being left in limbo.
Refinancing Costs & Considerations
Refinancing isn’t free – consider any discharge fees from your current loan and application or setup fees for the new loan. Sometimes these costs are negligible, or the new lender offers cashback that more than covers it. Just be sure the savings from a lower rate outweigh the one-off costs. Also, if you’re on a fixed rate, check for break costs – if your fixed term is almost up, it’s usually best to wait it out.
Improve Your Loan Terms (Even If You Don’t Refinance)
Maybe you refinance and get a great new loan – fantastic! But even if you decide not to switch lenders, you can still benefit by calling your current bank and asking for a rate review. Banks know you have options, and oftentimes they’ll reduce your rate to keep your business. It’s absolutely worth a phone call – you might save a few hundred dollars a year with a 10-minute conversation. And if they won’t budge? That’s even more reason to refinance with a lender that values you.
The Melbourne Advantage – Local Tips
One advantage of being a Melbourne-based borrower is the wealth of local expertise available.
- Local brokers (like Money Bar’s Melbourne mortgage brokers) know which lenders are currently prioritising faster approvals, better rates, or special deals for properties in specific suburbs. That insight can make a real difference in time-sensitive negotiations.
- Keep an eye on local developments: new infrastructure (like train station upgrades or highway extensions) can boost certain area values, which might affect your decision on where to buy or even how your current property’s value has changed (important for refinancing, as your equity is based on current value). Where to find updates on Melbourne infrastructure:
- Victorian Government’s Big Build website: covers major transport projects like the Metro Tunnel, North East Link, and Suburban Rail Loop.
- Victoria Planning Authority (VPA): detailed precinct plans for new suburbs, rezoning, and development corridors.
- Local council websites: check their “Planning & Projects” sections for suburb-specific developments.
- Real estate market reports: Platforms like Domain and REA Group often report on areas tipped for growth based on upcoming infrastructure.
- Victorian Department of Transport and Planning: useful for road, rail, and public transport upgrade announcements.
- Victorian Government’s Big Build website: covers major transport projects like the Metro Tunnel, North East Link, and Suburban Rail Loop.
Pro tip: Before you buy or refinance, search for upcoming projects in the area. Even smaller upgrades like a new shopping precinct or school zone can significantly impact long-term value.
Melbourne also has unique patterns – e.g., a big Spring selling season with more listings, which can be an advantage for buyers (more choice, potentially better prices). As a first-home buyer, shopping during these high-listing periods or in winter (when few others are looking) could score you a better deal.
As a refinancer, knowing your home’s value is key; if Melbourne prices have ticked up in your suburb over the last year, you might now own a larger equity stake than you thought, giving you more bargaining power with lenders.
Get Expert Help (It’s Free!)
Whether you’re buying your first place or refinancing your current loan, one constant remains — you don’t have to do it alone. Navigating bank jargon and endless comparison rates can be exhausting (and honestly, who has the time?). This is where working with a mortgage broker like Money Bar can be a game-changer. A good broker will scour the market for you, find deals that fit your situation, and guide you through the paperwork.
While some brokers may charge a fee for this service, Money Bar is paid directly by the lenders we work with – meaning there’s no cost to you for our advice and support. In a city like Melbourne, having someone who understands both the local property market and the lending landscape is a huge asset. It’s like having a personal finance coach for one of the biggest decisions of your life.
Conclusion & Next Steps
For young professionals in Melbourne, 2025 is all about being proactive. Whether you’re aiming to buy your first home or to refinance for a smarter deal, taking action now could set you up for years of financial security.
Ready to take control of your property future?
Contact Money Bar today for a free, no-pressure chat about your goals – and let’s make your next move your smartest yet.
By Dean Alateras, Mortgage Broker at Money Bar
Dean is a licensed mortgage broker based in Melbourne, passionate about helping clients navigate the complexities of home financing. As a Credit Representative (CRN 55438) of Connective Credit Services Pty Ltd (ACL 389328) and a member of the Mortgage & Finance Association of Australia (MFAA), Dean is committed to providing clear, honest, and tailored advice to each client’s unique financial journey.