About 1am on April 18, Sevdet Ramadan Besim drafted on his mobile phone why he intended to carry out a terror attack, and instructed his family on how he wanted his grave set and what they could do with his car and possessions, Melbourne Magistrates Court heard on Tuesday.

About four hours after outlining his intentions, he and four other young men were arrested in counter-terrorism raids across Melbourne's south-eastern suburbs.

Mr Besim, 18, of Hallam, is charged with conspiring to prepare, or plan for, a terror attack. Police allege he and co-accused Harun Causevic planned to run down a police officer with a car, behead that officer with a knife and seize the officer's gun and embark on a shooting rampage.

Magistrate Suzie Cameron on Tuesday refused Mr Besim's application for bail, on the grounds he was unable to satisfy the exceptional circumstances required to be released from custody.

Ms Cameron described as alarming the note Mr Besim drafted on his phone and conversations he is alleged to have had with a 14-year-old boy in the United Kingdom, about planning an attack.

Mr Besim and Mr Causevic, 18, of Hampton Park, are alleged to have conspired to plan the attack between February 23 and April 18.

Police allege the pair planned to attack an officer at an Anzac Day parade in Melbourne because of the day's significance to Australians and because such an attack would never be forgotten.

Australian Federal Police agent Denis Scott told the hearing Mr Besim and the boy in the United Kingdom spoke regularly in March through an online communications program, during which the pair discussed Mr Besim's plans and the weapons he would need.

Mr Scott said police believed Mr Besim held "extreme views in regard to the Islamic religion" and that he had told the 14-year-old boy he was prepared to die during an attack on police.

Police say that on March 17, Mr Besim told the boy: "all I wanna say is that insha'Allah im ready to fight these dogs on there doorstep. The more equipment im provided with the better but ill still go with jst a knife in my hand. I want to be among those Allah laughs at..."

Mr Scott said police had found a 40-centimetre "Rambo" knife in Mr Besim's car. He was also in possession of a taser and books and literature of Islamic text, the agent said.

The court heard Australian police were still analysing the contents of electronic devices seized from Mr Besim's property and transcribing telephone intercepts.

In opposing bail, Mr Scott said police believed Mr Besim continued to hold radical Islamic views and was a danger to the public.

But the teenager's mother, Sajamb, rejected a suggestion her son had a strict interpretation of Islam.

Mrs Besim said her son had applied for a passport last year because of an intention to travel to Dubai given his interest in architecture.

The court earlier heard police feared Mr Besim would travel overseas to fight with a terror organisation had his passport application been approved.

Mr Besim's parents told the court they were prepared to offer their family home and an investment property as surety and promised they would supervise him if released from custody.

Defence counsel George Georgiou, SC, said Mr Besim faced the prospect of at least a year in custody before a trial, which constituted special circumstances for his release on bail given his age and lack of criminal history.

Mr Georgiou said Ms Cameron could have imposed restrictions on Mr Besim that could ensure he did not leave his home without his parents, did not use the internet, gave up his car and had nothing to do with other people under police investigation.

But Ms Cameron said the restrictions Mr Georgiou proposed could easily be breached. She said she was satisfied the teenager still posed a risk to the public and authorities given his "deep disdain" for law-enforcement officers.

Mr Besim appeared in the dock clean shaven, with his hair cut short, and the court was packed with family members and supporters. His supporters wished him well as he was led into custody.

Mr Causevic applied for bail earlier this month but was refused. He and Mr Besim are due to return to court in August.

Mehran Azami, 19, who police allege had supplied weapons to Mr Besim and Mr Causevic, applied for bail last month and was refused. The two other teens arrested in the raids were later released.

The 14-year-old boy was arrested in late March in the English city of Blackburn.