The Pros and Cons of Buying Your First Home in Merrylands

Merrylands offers first home buyers a genuine entry point into property ownership without needing to move an hour out of Sydney.

The suburb sits 25 kilometres west of the CBD with direct train access, established schools, and a median price point that still allows buyers on moderate incomes to get in. But knowing you want to buy and knowing how to structure the purchase are two different things. The difference between a confident application and a rejected one often comes down to understanding which deposit option fits your situation, which government schemes you qualify for, and how lenders assess your application before you submit it.

What Deposit Do You Actually Need as a First Home Buyer

You can purchase with as little as a 5% deposit if you meet the eligibility criteria for the First Home Guarantee. This federal scheme was expanded in October 2025 with no income caps and no place limits, which means Merrylands buyers can use it without restriction. The scheme allows you to avoid Lenders Mortgage Insurance (LMI) even with a smaller deposit, which would otherwise add thousands to your upfront costs.

Without a government guarantee, most lenders require a 10% deposit plus costs if you are willing to pay LMI, or 20% if you want to avoid it entirely. Consider a buyer purchasing in Merrylands who has saved a 5% deposit and qualifies for the First Home Guarantee. They can proceed without LMI and use their remaining savings to cover stamp duty concessions, legal fees, and building inspections. That same buyer without access to the guarantee would either need to save another 5% or accept the LMI cost, which could run into the low five figures depending on the loan size.

Deposit size also affects your interest rate. Lenders typically offer better pricing to borrowers with a 20% deposit or more, because the loan represents lower risk. If you are using a 5% or 10% deposit, you may not receive the same interest rate discount, even if LMI is covered by a government scheme.

How First Home Buyer Stamp Duty Concessions Work in NSW

Eligible first home buyers in NSW pay no stamp duty on properties valued under $800,000, or vacant land under $350,000, under the First Home Buyers Assistance Scheme. For most properties in Merrylands, this concession removes one of the largest upfront costs from the equation.

Stamp duty is calculated on the purchase price, and the saving can be substantial. If you are buying an established home and the property is within the threshold, the concession applies automatically when you settle, provided you meet the eligibility criteria. You must be over 18, an Australian citizen or permanent resident, and you or your spouse must not have previously owned property in Australia.

The $10,000 First Home Owner Grant in NSW applies only to new homes valued up to $600,000, or house and land packages up to $750,000. This means if you are buying an established property in Merrylands, you will not receive the grant, but you will still benefit from the stamp duty exemption if the price is under $800,000.

Fixed or Variable: Which Interest Rate Structure Suits a First Home Loan

A variable interest rate gives you flexibility to make extra repayments and access features like an offset account or redraw facility. A fixed interest rate locks in your repayment amount for a set period, which can be useful if you want certainty or if you expect rates to rise.

Most first home buyers benefit from splitting the loan between fixed and variable. This approach allows you to lock in a portion of your debt while keeping access to offset and redraw on the variable portion. In our experience, buyers who fix 50% to 70% of the loan get enough stability to budget confidently while maintaining the flexibility to pay down debt faster if their income increases.

If you fix your entire loan and your circumstances change, breaking the fixed rate early can trigger break costs. These are calculated based on the difference between your fixed rate and the current wholesale rate, and they can run into thousands of dollars depending on how much time remains on the fixed term. Keeping part of your loan variable gives you room to adjust without penalty.

What Lenders Actually Look for in a First Home Loan Application

Lenders assess your income, expenses, existing debts, and credit history to determine your borrowing capacity. They also apply a serviceability buffer, which means they test whether you could still afford repayments if interest rates rose by several percentage points.

Your application is stronger if you can demonstrate genuine savings, meaning funds you have accumulated over at least three months rather than a one-off gift or windfall. Lenders prefer to see a consistent pattern of saving because it suggests you can manage a mortgage repayment. If part of your deposit is a gift from family, most lenders will accept it, but they will want to see that you have saved a portion yourself.

Getting pre-approval before you start looking at properties gives you a clear budget and shows selling agents you are a serious buyer. Pre-approval is not a guarantee, but it confirms a lender is willing to lend you a specific amount based on your current financial position. It is valid for three to six months depending on the lender, and it allows you to move quickly when you find the right property.

How Merrylands First Home Buyers Can Use Super to Boost Their Deposit

The First Home Super Saver Scheme allows you to contribute up to $15,000 per financial year into your superannuation fund, and withdraw up to $50,000 in total to use as a deposit. Contributions are taxed at 15% inside super rather than your marginal tax rate, which can be a significant saving if you earn above the tax-free threshold.

You need to make voluntary contributions, either before-tax through salary sacrifice or after-tax personal contributions. You cannot use your employer's compulsory super contributions for this scheme. Once you are ready to buy, you apply to the Australian Taxation Office to release the funds, and they are paid directly to you minus a small withdrawal tax.

This scheme works well if you have a stable income and can afford to set aside extra contributions for at least one financial year. It does not replace the need to save a deposit, but it accelerates the process and gives you a tax advantage while doing it. If you are already contributing extra to super, redirecting some of that towards the FHSS can make sense, but it should not come at the expense of building your emergency savings outside of super.

Should You Buy Alone or With a Co-Borrower

Buying with a partner, family member, or friend increases your borrowing capacity because lenders assess the combined income of all applicants. It also allows you to split deposit requirements and ongoing costs, which can make purchasing more achievable if you are both earning moderate incomes.

The downside is that you are both equally liable for the mortgage, even if one person stops contributing. If the relationship breaks down or circumstances change, separating the loan or selling the property can become complicated. You also both need to meet first home buyer eligibility criteria to access government schemes. If one person has owned property before, neither of you will qualify for stamp duty concessions or grants.

Joint applications require clear agreements upfront about how much each person contributes, what happens if one person wants to sell, and how equity is divided. Most solicitors recommend a co-ownership agreement that sets out these terms before you exchange contracts. It is not legally required, but it removes ambiguity if things go sideways later.

Using a Mortgage Broker to Compare Home Loan Options

A mortgage broker in Merrylands can access loan products from multiple lenders, including options that are not available directly to the public. This gives you a wider view of what is available and allows you to compare interest rates, fees, and loan features side by side.

Brokers also handle the application process, which involves preparing your financial documents, submitting the application, and liaising with the lender until settlement. For first home buyers who have not been through the process before, this support can prevent costly mistakes and speed up approval times.

There is no cost to you for using a broker in most cases. Brokers are paid a commission by the lender once your loan settles, so their service is typically provided at no charge to the borrower. The key is to work with someone who explains your options clearly and structures the loan to suit your situation, not just the product that pays the highest commission.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions