Insights from Nathan Murphy, Mortgage Broker at BlueRock

Finance is the part of the property journey that makes or breaks a purchase. Yet for many buyers, it remains the least understood piece of the puzzle. In a recent episode of Property, Straight Up, host Mel Dennis sat down with Nathan Murphy, a mortgage broker at BlueRock, to cut through the confusion and give buyers a clear picture of what smart, strategic finance actually looks like.

BlueRock is a Melbourne-based multidisciplinary firm that has grown from a boutique accounting practice, founded by Peter Laylor in 2008, into a one-stop-shop for business owners and investors. Today it offers accounting, financial advice, legal services, digital marketing, and mortgage broking all under one roof. Nathan leads the mortgage broking division and works primarily with self-employed clients and business owners who need a finance strategy that goes well beyond simply getting a loan approved.

How Much Can You Actually Borrow Right Now?

Borrowing capacity has shifted significantly over the past few years, and Nathan points to two key drivers behind that change.

The first is interest rates. The RBA cash rate climbed from a historic low of 0.10% to 4.35%, and that increase has had a direct impact on how much lenders are willing to offer. But a second driver is often overlooked: the cost of living.

Banks use what is known as the Household Expenditure Measure (HEM) when assessing a loan application. Rather than relying solely on what a borrower declares they spend each month, the bank applies its own benchmark based on income, household size, and number of dependants. Even if a family is genuinely living frugally and spending less than the measure, the bank will apply the higher figure.

The practical impact of this is significant. Nathan regularly sees clients who were pre-approved for $1 million 18 months ago now being told they can borrow $800,000. That gap is the combined result of rate rises and updated living cost benchmarks, and it catches many buyers off guard.

There is also a further buffer baked into the assessment process that buyers often do not account for: banks apply a 3% buffer on top of the current interest rate when calculating repayments. So if the advertised rate is 6%, the bank assesses your ability to repay at 9%. This is designed to protect borrowers from future rate increases, but it does further compress what you can borrow.

The Biggest Mistakes Buyers Make

When asked about the most common mistakes he sees, Nathan’s answer was immediate: lack of preparation.

The scenario he described plays out more often than it should. A buyer falls in love with a property, signs a contract, and then approaches their bank or broker to arrange finance, only to find the bank says no. In some cases, they arrive with three days left on their finance clause. In others, they are already unconditional.

In those situations, Nathan and his team can often find a solution, particularly for clients with solid incomes. But the options narrow significantly under time pressure. A client who had weeks to find the right lender might have been placed with a major bank at a competitive rate. A client with three days may end up with a second or third tier lender at considerably higher cost.

The other common mistake is assuming a previous pre-approval still holds. Borrowing conditions change. A pre-approval from 12 months ago does not reflect today’s lending environment, and treating it as current is a risk that can have real financial consequences.

What a Pre-Approval Actually Means

Pre-approval is one of the most talked-about concepts in property finance, and also one of the most misunderstood. Nathan was clear about what it does and does not cover.

A genuine pre-approval involves the bank running a full credit assessment. They look at income, liabilities, living costs, and credit history. What they have not yet assessed is the specific property. So a pre-approved buyer still needs to ensure that the property they intend to purchase fits within the lender’s policy. A rural property, a very small apartment, or a niche asset type can all create complications even after a pre-approval has been granted.

For auction buyers in particular, pre-approval is not optional. At auction, there is no finance clause. You bid, you win, and you are unconditional from that moment. Having done everything possible in advance, including pre-approval and advice from a property advocate on appropriate price limits, is the closest thing to a safety net that the auction process allows.

Structuring Your Debt from Day One

One of the themes Nathan returned to throughout the conversation was debt structure, and why it matters far more than most buyers realise, even for first home buyers.

Key decisions around debt structure include:

• Fixed versus variable rate: The right choice depends on the current rate environment and economic outlook. These should be reassessed regularly, as the comparison between fixed and variable rates can shift materially from one week to the next.
• Principal and interest versus interest only: The appropriate structure depends on whether the property is an owner-occupier or investment purchase, the client’s broader financial position, and their long-term goals.
• Ownership structure: Who holds the asset, individually, jointly, or in a trust or company structure, can have significant tax and estate planning implications. This sits at the intersection of mortgage broking, financial advice, and accounting, which is precisely why Nathan emphasises having the right team around you.

Nathan was careful to note that some of these decisions, particularly around ownership structure, go beyond what a mortgage broker can advise on. They require input from an accountant or financial advisor. Getting the structure wrong at the outset can be costly and difficult to unwind, which is why that upfront conversation with the right advisors matters so much.

Red Flags That Can Derail a Finance Application

Nathan flagged several issues that can catch buyers completely off guard.

The first, and perhaps the most counterintuitive, is having no credit history at all. Early in his career, Nathan had a client declined by a major lender not because of bad credit, but because of no credit. That particular bank placed significant weight on credit reporting as an indicator of reliability. With nothing on file, they had no confidence to lend. It is a reminder that having never borrowed money is not always the clean slate it appears to be.

More commonly, credit issues arise from misrepayments. This includes missed repayments on personal loans, credit cards, and even buy-now-pay-later products like Afterpay. These are treated by banks in the same way as any other form of credit. A pattern of late or missed payments raises the question of whether a borrower can manage a home loan many times larger. Even a single default, if left unresolved, can significantly affect which lenders will consider an application.

The property itself can also be a red flag. Certain types of properties, including very small apartments, rural or regional locations, and some niche asset types, fall outside the lending policy of some major banks entirely. Knowing whether a property is lendable before you bid or sign is an important part of due diligence.

Know Your Credit Score Before the Bank Does

One practical step Nathan recommends for anyone considering a purchase is to check their own credit score before approaching a lender. This can be done through various online platforms, or through a mortgage broker directly.

Importantly, checking your own credit score does not leave an inquiry on your credit file and does not affect your rating. It simply tells you what the bank will see when they run their assessment. If there are issues, errors, or defaults you were unaware of, you want to discover those before submitting a formal application, not after.

First Home Buyers: Extra Considerations

While the fundamentals of smart finance apply to all buyers, Nathan noted that first home buyers have additional layers to navigate, and additional benefits available to them.

Government schemes such as the First Home Buyer Deposit Scheme and stamp duty exemptions and concessions can make a meaningful difference to what is achievable. These are not automatically applied and require specific eligibility checks, which is another reason why engaging a broker early in the process adds value.

For buyers considering an upgrade, bridging finance may also be worth exploring, though as Nathan noted, its suitability depends heavily on individual circumstances.

The Team Around You Makes All the Difference

If there is a single thread running through Nathan’s advice, it is this: do not try to navigate property finance alone.

A mortgage broker costs you nothing directly. Brokers are remunerated by the bank or lender upon settlement, meaning their expertise and access to a wide panel of lenders comes at no charge to the borrower. There is no reason not to use one.

Beyond the broker, Nathan consistently pointed to the value of building a team that includes a financial advisor, an accountant, and a property advocate. Each brings a different lens to the same decision. The financial advisor helps with structure and long-term strategy. The accountant addresses tax implications. The property advocate ensures the asset itself is the right one at the right price. The mortgage broker ensures the finance is structured in a way that supports all of the above.

Working in combination, these advisors help buyers avoid the costly mistakes that come from acting on impulse, incomplete information, or advice from people outside their area of expertise.

If You Are Thinking of Buying in the Next Three to Six Months

Nathan’s advice for buyers in the lead-up to a purchase was straightforward:

• Check your credit score now, before any formal application is submitted
• Meet with a mortgage broker to understand your current borrowing capacity and debt structure options
• Engage a financial advisor and accountant to discuss ownership structure and tax implications
• Get a genuine, current pre-approval in place before you start seriously looking
• Work with a property advocate to ensure you are targeting the right assets at the right price

Preparation, done well in advance, removes the stress and the risk. It also puts you in a stronger position when the right property comes along.

The Bottom Line

Property finance is not a box-ticking exercise. Done well, it is a strategic decision that shapes not just your current purchase but your entire long-term wealth position. Nathan Murphy and the team at BlueRock work with clients to ensure that every finance decision, from borrowing capacity to debt structure to lender selection, is made with that bigger picture in mind.

If you would like to connect with Nathan, his details are in the show notes for this episode of Property, Straight Up.

This article is based on the Property, Straight Up podcast episode “Demystifying Property Finance,” featuring Nathan Murphy from BlueRock.

Listen here: https://www.buzzsprout.com/2609119/episodes/19245210

Watch here: https://youtu.be/v5OSwj3VrUw