Despite the unaffordability of the Australian housing market, low-deposit loans for house and land packages have enabled many first home buyers to secure large properties in Melbourne. These buyers only need to pay the small deposit of $2,000, add their $10,000 first home owner grant, and take out a personal loan to cover the gap between that amount and the five per cent deposit.

Building giant Metricon is one of the few builders offering this kind of arrangement. According to Peter Langfelder, Metricon's general manager of Victorian housing, this has opened more doors to home ownership. However, he was quick to point out that customers faced rigorous checks to qualify for the home loan.

"It is a responsible loan. We're not putting people into undue risks," Langfelder said. "It's normal lending under the same criteria as any mortgage."

However, experts have warned these first home buyers that they could face serious financial complications with this arrangement, with figures showing some Melbourne suburbs having a high mortgage delinquency rate. In fact, they are among the worst in the country.

"By saving only $2,000, and not going through the exercise of saving a more substantial deposit, they're paying for it longer term in the mortgage insurance and the unsecured debt," said buyer's advocate Cake Bakos.

"If you can't come up with the gap, you'll lose your deposit and the builder or developer can go after you," added Mario Borg, a financial strategist in Melbourne.

Experts advised first homeowners to consider their future financial situations as there are significant hidden costs in buying larger houses, such as higher heating fees and transport costs.
 

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