Avoid These 3 Loan Mistakes as an ADF First Home Buyer

Choosing between a fixed, variable or split loan comes down to how much certainty you need and how much flexibility you want.

For ADF members buying in Forrest, a posting, a deployment or a pay change can all affect that choice. This article covers three common mistakes first home buyers make and how to avoid them.

Fixed, Variable and Split Loans: What Is the Difference?

A fixed interest rate stays the same for an agreed period, a variable interest rate can move up or down with the lender's decisions, and a split loan divides your borrowing between the two. Each is one of the main home loan options, and each has a trade-off.

With a fixed rate, your repayment on that portion is known in advance. The trade-off is that lenders often limit extra repayments on fixed loans and may charge a break cost if you leave early. Limits and costs differ between lenders, so ask for them in writing.

With a variable rate, your repayments can rise as well as fall. In return, variable loans commonly come with features such as an offset account and redraw. Confirm which features apply to the loan you are offered.

Mistake 1: Fixing the Whole Loan Without Checking the Exit Rules

Fixing your entire loan gives you certainty, but it can lock you in if your plans change. A posting order, a sale or a refinance during the fixed period can trigger a break cost, depending on the lender and market conditions at that time.

Before fixing, ask your broker three things: how much extra you can repay each year, how a break cost is calculated, and what happens when the fixed term ends. Our fixed rate expiry calculator shows what a rate change at the end of a fixed term could mean for your repayments.

Mistake 2: Going Fully Variable When You Need Repayment Certainty

A fully variable loan gives you flexibility, but your repayments can change when the lender changes its rate. If your budget is tight, that movement can be hard to absorb.

Test your budget before you commit. Use the borrowing capacity calculator and then check that you could still cover repayments if your interest rate rose. A first home buyer budget should also allow for rent or other costs if you are posted away from the home.

How a Split Loan Works: A Worked Example

A split loan lets you fix part of the loan for certainty and keep part variable for flexibility. The cost is that you manage two rates, and the extra features usually sit on only one portion.

As an example, consider a first home buyer in the ADF who borrows $500,000 over 30 years. For illustration, we use a rate of 6.75% p.a. on both portions. This is an example rate only, not a current offer.

On the full $500,000, the monthly repayment is about $3,243. The member splits the loan into $200,000 fixed and $300,000 variable. The fixed portion costs about $1,297 a month and the variable portion about $1,946 a month. Together that is the same $3,243, because the example rate is the same on both.

The member expects a $30,000 payout from a long-service bonus. Because the variable portion is available for extra repayments, they put the money into an offset account linked to it. Offset account availability and rules depend on the lender, so this is confirmed before settlement. At the example rate, $30,000 offset against the variable balance cuts roughly $2,025 a year in interest while the money stays in the account. The fixed portion stays untouched and its repayments stay predictable.

The outcome is a repayment the member can plan around, plus a place to park spare cash. The trade-off is that only the variable side gets this benefit. When the fixed term ends, the fixed portion rolls onto a new rate, which could be higher or lower. Check how your lender's split loans work before you apply.

Mistake 3: Choosing a Loan Without Checking the Deposit Scheme Rules

Your deposit and scheme choice can limit which loan features you can use. Under the Australian Government 5% Deposit Scheme, eligible first home buyers can buy with a 5% deposit, and the loan is provided by a participating lender. Features such as offset accounts and extra repayment limits on fixed rates vary between participating lenders, so ask the lender which features apply.

Our page on the 5% deposit scheme for ADF members explains how this works. If you are considering shared equity, our Help to Buy page covers that scheme. Under Help to Buy, Housing Australia may approve temporary absences, including ADF postings. You cannot rent out the home without Housing Australia's written approval, so contact them before you do anything.

Buying in Forrest as an ADF First Home Buyer

Forrest is an inner south Canberra suburb in the ACT, so ACT rules apply to your purchase. For transactions from 1 July 2026, the ACT Home Buyer Concession Scheme means eligible buyers pay no conveyance duty on a home. The scheme has no property price cap or income threshold.

To qualify, all buyers must be individuals aged 18 or over, and neither you nor your domestic partner can have owned property anywhere in the five years before the transaction date. At least one buyer must live in the home for at least a year, starting within a year of settlement. Because postings can interrupt that timeline, check how the occupancy rule applies to you with the ACT Revenue Office or your conveyancer before you sign.

These first home buyer stamp duty concessions reduce upfront costs, but they do not change your loan choice. Get loan pre-approval first so you know your price range before you make an offer. Our Forrest mortgage broker page covers local support, and our first home buyer guide covers the wider process.

Call one of our team or book an appointment at a time that works for you. We will compare fixed, variable and split options against your posting plans and budget, and explain the costs of each before you commit.

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