Understanding Rent Assistance Eligibility
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10 Nov, 2023
Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.90%p.a. | 5.90%p.a. | $2,373 | Principal & Interest | Variable | $0 | $0 | 90% | Featured |
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6.04%p.a. | 6.06%p.a. | $2,408 | Principal & Interest | Variable | $0 | $530 | 90% | 4.5 STAR CUSTOMER RATINGSINCLUDES NOV RBA RATE INCREASE |
| |||||||||
6.09%p.a. | 7.21%p.a. | $2,421 | Principal & Interest | Fixed | $0 | $180 | 95% | |||||||||||
6.09%p.a. | 6.48%p.a. | $2,421 | Principal & Interest | Fixed | $350 | $210 | 95% | |||||||||||
6.24%p.a. | 7.26%p.a. | $2,460 | Principal & Interest | Fixed | $395 | $0 | 95% | |||||||||||
6.29%p.a. | 6.12%p.a. | $2,473 | Principal & Interest | Fixed | $10 | $250 | 90% | |||||||||||
6.49%p.a. | 6.84%p.a. | $2,526 | Principal & Interest | Variable | $395 | $0 | 90% | |||||||||||
6.49%p.a. | 6.60%p.a. | $2,526 | Principal & Interest | Variable | $10 | $799 | 90% | |||||||||||
6.59%p.a. | 6.60%p.a. | $2,552 | Principal & Interest | Variable | $0 | $0 | 95% | |||||||||||
6.69%p.a. | 6.89%p.a. | $2,578 | Principal & Interest | Fixed | $390 | $0 | 90% | |||||||||||
6.74%p.a. | 7.37%p.a. | $2,592 | Principal & Interest | Fixed | $0 | $160 | 90% | |||||||||||
6.79%p.a. | 6.84%p.a. | $2,605 | Principal & Interest | Variable | $0 | $600 | 95% | |||||||||||
6.84%p.a. | 7.16%p.a. | $2,726 | Principal & Interest | Variable | $0 | $0 | 95% | |||||||||||
6.84%p.a. | 6.88%p.a. | $2,618 | Principal & Interest | Variable | $0 | $0 | 95% | |||||||||||
6.94%p.a. | 7.31%p.a. | $2,645 | Principal & Interest | Variable | $395 | $200 | 90% |
A first home buyer loan provides first-time property buyers with the means to break into the housing market.
While it works as a regular mortgage, some lenders offer first home buyers rate discounts, waiver on fees, and free loan features that can help them manage their finances while they service their loans.
As a first time home buyer, it is important to know all the types of interest rates there are. Similar to regular mortgages, first home buyer loans have different types, each has its own advantages and caters to a specific type of first-time borrower.
Getting the best first home loan will always depend on one’s financial situation. The best home loan for you might not work for somebody else. Yourmortgage.com.au has put together a list of factors to consider so you can get the “best” first home loan:
First home buyers who are applying for mortgages have the option to choose their repayment type according to their budgets.
For many loan products, the principal and interest (P&I) repayment is the default structure. Repayments for a P&I loan go towards the principal of the loan and the interest. This means that monthly repayments gradually decline every year as the principal amount of the loan gets paid off.
An IO loan provides borrowers a certain period, which usually lasts for five years when they will only be required to pay for interest charges. This means that monthly repayments will be significantly lower with an IO loan than with a P&I loan.
Home loan rates might also be fixed or variable – or, sometimes, both. A fixed rate loan keeps your repayments at a set interest rate across the repayment period, whereas a variable rate changes depending on the current market rate, thereby affecting the value of your repayments. Another option is a split rate, which means a portion of your loan stays fixed at a set rate, with the remaining portion at a variable rate. In this case, you can typically decide what percentage at which you wish to split the loan.
Below are some of the most common home loan features for first time home buyers:
An offset account works like a high-interest savings account. Funds deposited to an offset account is accounted daily against the loan balance, reducing the amount of interest charged to the loan.
A redraw facility allows borrowers to make extra repayments to their loan which they can access whenever then need extra funds.
Making extra repayments towards the loan reduces the overall interest charges, allowing borrowers to pay their home loans early.
How often a borrower makes monthly repayment affects the overall time needed to pay off the loan completely. Paying weekly or fortnightly basis allows borrowers to pay their loan faster as it squeezes in an extra month of payments annually.
There are two options on how one can apply for a home loan: through a broker or directly to their lender of choice.
First home buyers can seek the help of mortgage brokers in finding the ideal lender and loan product for their current financial conditions.
Buyers can also do everything by themselves by reaching out to their lender of choice and applying directly.
Either way, first-time borrowers would need to secure their credit rating to know how likely they are going to be approved for a loan.
When applying for a loan, borrowers must make sure that they do not make a fishing expedition and send out several applications to different lenders. They could end up with several remarks on their credit report that would look suspicious to lenders.
Aside from this, here are some tips you should know for your home loan application journey:
One of the challenges when buying your first home is saving up for a home loan deposit.
Typically, first home buyer home loan would require at least 20% of the property’s price as a deposit. However, it could take buyers a while to save for this amount.
This is where Lender's Mortgage Insurance (LMI) comes in handy — borrowers are allowed to have as little as 5% of the property’s value as a deposit or down payment as long as they pay this insurance premium.
The LMI is a type of insurance that protects lenders should a borrower default on their home loan. Most banks and lenders require borrowers to pay for LMI if their deposit is below the standard rate of 20% of the purchase price.
The amount of LMI usually depends on how much the borrower has for a deposit — the bigger the deposit, the lower the required premium would be.
Borrowing capacity is another concept first home buyers need to understand before taking the plunge.
When calculating applicants’ borrowing capacities, lenders usually look at three factors: annual income, monthly expenses, and loan details.
More income does not necessarily equate to higher borrowing power. Sometimes, high-income earners have lower borrowing capacity due to other financial commitments that leave them with little disposable income.
Borrowers who have more income, fewer expenses, and fewer financial commitments can land themselves a good offer from their chosen lender.
The paperwork involved in applying for a mortgage is crucial as lenders use these documentary requirements to analyse applications.
Buyers should ensure that they submit these documents promptly and properly to ensure a hassle-free application:
In an effort to support the aspirations of many Australians to achieve homeownership, the federal and state governments have rolled out several grants and support schemes to ease the financial burden involved in homebuying.
One of the biggest support schemes first time buyers must not miss out on is the Home Guarantee Scheme, which includes the First Home Guarantee Scheme, the Regional First Home Buyer Guarantee, and the Family Home Guarantee.
Formerly called the First Home Loan Deposit Scheme, the Home Guarantee Scheme provides allows first home buyers to apply for a mortgage with as little as a 5% deposit. With the scheme, borrowers will not need to pay the LMI even if their deposits are lower than the standard set by banks.
Eligible residential properties include existing houses, townhouses, apartments, house and land packages, land and a contract to build a home, and an off-the-plan apartment.
Introduced in 2000, the First Home Owner Grant (FHOG) is a state-based support scheme that provides first home buyers with a one-off grant that will go towards the purchase of their property.
Each state also has its own guidelines for implementing its respective FHOG scheme. Most state governments are offering a $10,000 grant.
First home buyers are usually given exemptions and concessions on stamp duty, which refers to the tax imposed by the local government to have the property transferred to the name of the buyer.
Each state has their own rules on stamp duty. Most first home buying transactions, however, are exempted from this tax, as long as the properties meet the value threshold.
Here is a list of current programs in some of the states and territories specifically catered towards helping fresh property owners in their homeownership journey.
South Australia does not currently offer other grants for first-home buyers aside from the First Home Owner Grant.
The mortgage application process can vary depending on the situation, but it usually takes around three to five business days to get approval from your chosen lender.
However, the whole process can take weeks especially if you include the time needed for you to secure some of the documentary requirements, come up with the required deposit, and iron things out with your seller.
Before applying for a mortgage, you should be able to know how much you can afford. Several mortgage calculators are available online, all of which can help you determine your capacity to apply for a home loan.
Once you have established your capacity to buy, you will need to consider three things before submitting a mortgage application: your strategy to save up for a deposit; the type of interest rate that would work based on your current financial health; and loan features that can help you save in the long run.
Applying for a home loan, whether you are a first-home buyer, an existing homeowner, or an investor, would require you to have 20% of the property’s price as a deposit. Your lender would charge you for LMI if your deposit is anywhere lower than that requirement.
However, first-home buyers can take advantage of several government schemes that would allow them to enter the market with as little as a 5% deposit.
First-home buyers are required to pay stamp duty in Australia but each state has its own support scheme that could either give discounts or waive the tax discount depending on the situation.
In most cases, exemption and discounts are only available if the property meets a certain price threshold. Each state has its own rules when it comes to stamp duty exemptions.
Deposit schemes like the First Home Loan Deposit Scheme and New Home Guarantee Scheme work by providing buyers with an opportunity to buy with at least a 5% deposit. The remaining deposit required will be guaranteed by the government, which means the borrower will not need to pay for Lenders Mortgage Insurance (LMI).
When applying for first-home buyer loans, the most important requirements aside from the mortgage deposit are the contract of sale, proof of your income and employment, your credit score, and proof of identity.
Not sure which type of loan is best for your needs?
Your Mortgage can help you find out.