A GUIDE TO THE BEST HOME LOANS FOR FIRST-HOME BUYERS IN AUSTRALIA

 Buying your first home is always an exciting and anxious task. We might always get stuck at a place, thinking, Are we ready to get one? Or other factors like loans, etc. These are some of the factors that initially daunt a first-home buyer.

But for these, there is always a helping hand to overcome these obstacles. By receiving help from a mortgage broker, planning financially from the moment you thought you wanted to buy, or getting help from conveyancers, they can help you figure out which loans to take as a first home buyer since there are many options, like government schemes.

While we have these options, we should not fear not taking the steps towards your dreams. In this blog, we will guide you through how to tackle the issues, discuss a few of the best home loans, the role of mortgage brokers, etc.

WHAT ARE THE FACTORS TO CHECK WHEN CHOOSING YOUR FIRST HOME LOAN

There are few features of a home loan that you have to understand before committing for a financial step.

Let’s look at some of the home loan features that you have to consider before taking the first step for home loans.

Interest rates

The first thing to notice about any home will be the mortgage interest rate. Lender’s charge  a percentage of loan amount, for borrowing money.

The rates vary according to whether the loan is a fixed rate home loan, where the interest rate remains same throughout the loan term, or a variable rate home loan where the interest rate can fluctuate with the Australian market rates.

Lenders Mortgage Insurance

Another crucial factor to consider is Lender’s Mortgage Insurance (LMI). Lenders require this insurance when the deposit is less than 20% of the property’s value. In the event that you default on the loan, it safeguards the lender. Even while it raises your expenses, it may allow you to buy a house faster and with a lesser down payment.

Loan Term

The length of home loan impacts both on the amount you pay each month and the total cost of the loan.

In Australia, home loans typically have 30-year terms. Less money is paid each month as the loan term lengthens, but more interest is paid overall, increasing the total amount paid.

Fees

Interest rates will be the first one to consider but there will also be fees that come with home loans which includes application, annual, or early repayment fees.

THE BEST HOME LOANS FOR FIRST HOME BUYERS

Since there are many options available for first home buyers, it can be a bit confusing to pick the right one for you.

Don’t worry, in this blog we will discuss the various home loans that will best fit for your needs.

Variable rate home loans

The variable rate home loans are very flexible types of loans which can go up or down anytime depending upon the market changes. The flexibility means you can make extra repayments, which will save you money in the long run.

And also you will be able to redraw any extra repayments, in case you are in need of these funds.

Fixed rate home loans

In a fixed rate home loan, the interest rate will be fixed for some fixed year.   

These loans, however, are not flexible, and you may be assessed a price if you pay off the loan before the agreed-upon time frame.

Split home loans

Split home loans have the beneficials for both variable home loan and fixed home loan. Means, a part of your loan can be fixed, and the other portion will be flexible.

GOVERNMENT SCHEMES FOR FIRST HOME BUYERS

The Australian government has also initiated various schemes to help first home buyers for the journey for buying a home. These government initiatives reduce the financial burden.

First Home Owner Grant (FHOG)

The First Home Owner Grant (FHOG) is a one time financial assistance for the first home buyers who are eligible to own their first home. The amount sanctioned can vary according to the state, so before forwarding enquire with the official state authorities,

First Home Loan Deposit Scheme (FHLDS)

FHLDS is another scheme offered by the government  that guarantees up to 15% of the property value. Thanks to this programme, purchasers can move forward with deposits as low as 5%, avoiding the expensive lenders' mortgage insurance (LMI) that normally kicks in when the deposit falls below 20%.

First Home Super Saver Scheme (FHSSS)

First-time homebuyers are able to save for a home by voluntarily contributing to their super fund through the First Home Super Saver Scheme (FHSSS). After that, buyers can take these money out for a deposit, which could help them reach their savings target faster and save more tax because they are contributing to their super fund through this arrangement.

WHAT’S THE ROLE OF MORTGAGE BROKERS

Whether you're buying a house for yourself or as an investment, it can be overwhelming to make the right decision.

Fortunately, though, mortgage brokers may greatly enhance your decision-making process.

They assist first-time homebuyers like you in navigating the complexity of loan products as independent, accredited professionals with in-depth industry knowledge.

Mortgage brokers will assess your financial status and aspirations before finding the ideal loan for you. They may offer a greater range of options because they have access to a large selection of home loans from both larger banks and smaller lenders. To save you time and worry, they also take care of the paperwork.

The ability to save money is a significant advantage of working with a mortgage broker.

Experts at negotiating loan terms that lead to lower interest rates and costs are brokers. When your loan is paid off over time, these savings could add up. Getting in touch with a bank directly eliminates this middleman, but you can lose out on a higher offer for your house or investment property. So getting in touch with a broker for home loans will be a good option to navigate things smoothly.