Police and arson squad detectives are investigating.

Bianca Ortolan and her fiancé said they were woken by “really loud bangs”, which they initially thought were gunshots.

“It wasn’t ’til our house filled with smoke that we realised something was going on and we came out to the street,” she said on Sunday morning. “We heard screaming. It just sounded like the man was screaming for help.”

Ms Ortolan and her mother, Debra Ortolan, helped to care for another woman and her three small sons who lived next to the home.

“She said she lived next door and heard the explosion, saw the smoke and just grabbed her kids and ran out,” Mrs Ortolan said.

“It’s just horrific, absolutely heartbreaking to not be able to do anything.

“The garage, where I believe the fire started, was full of rubbish, oils and chemicals, it was chocka-block full.

“I believe he worked at or owned a Japanese Restaurant … there was three small girls that lived there, you’d see them walking down to the lake.

“Talking to the neighbour, she said there was no way to get out of the back, and the porch, front door and garage was all on fire by the time she escaped and the fire trucks arrived … There’s a three-storey drop behind the house to the freeway, there’s no other way to escape.”

Another neighbour, Steve Mizeracki, said he woke just before 2am to sirens and saw ambulances, fire trucks and police vehicles parked along the street.

From the balcony of his townhouse, he could see a “big cloud of smoke” bellowing from the burning home. “The smoke was very white, it was big, huge. Like a big cloud,” he said.

Residents of neighbouring homes were asked to leave their homes and their properties inspected for fire damage. A community warning was later issued for smoke in the area.

Mr Mizeracki said he had lived in the area for 20 years, and it was “normally very quiet”: children played in the street and people walked their dogs on a typical Sunday morning.

“Nothing like this ever happens here. I’m very sad,” he said.

A section of Tulloch Grove remained cordoned off by police on Sunday morning.

Nilanthie De Silva, who also lives on the street, said the smoke from the fire was so thick that she and her husband had to wear a N95 mask.

“I feel sad just talking about it … we jumped out of bed. We didn’t know where it was, but there were so many fire trucks outside,” she said.

“I haven’t slept. We have had a terrible year, and now to start the year like this is so unsettling.

“There’s lots of townhouses, and plenty of people are renting so they are in and out. Some of these townhouses only have one entrance. If there’s a fire, how do you get out?”

A man, believed to be in his 50s, was taken to The Alfred hospital with serious injuries.

Anyone with information is urged to contact Crime Stoppers on 1800 333 000 or make a report at www.crimestoppersvic.com.au.