FIRST HOME LOANS
Getting their first house is a dream for many people. But getting on the property ladder can be infamously challenging. If you're a first home buyer in Australia, getting a home loan can seem like a daunting task.
There are several government programs, grants, and efforts specifically designed to help first-time homebuyers move into their first house more quickly. But, before you go any further, keep in mind that there are several variables to consider, such as interest rates, fees, and loan features.
Types of interest rates for first-time buyer mortgages
Here are some examples of typical mortgage interest rates for first-time buyers:
- Variable interest rate: The interest rate on a variable loan can change over time based on market conditions and the lender’s policies. Mortgage payments with a variable interest rate can fluctuate over time.
- Fixed interest rate: A fixed interest rate remains constant for a set period of time, usually ranging from one to ten years. With a fixed interest rate, your mortgage payments stay constant, making budgeting easier. However, fixed interest rates can be higher than variable interest rates, and you may be charged a penalty if you pay off the loan early.
- A split interest rate is a mix of a variable and a fixed interest rate. With a split interest rate, you can divide your loan into two portions, one with a variable interest rate and the other with a fixed interest rate. This allows you to benefit from both kinds of interest rates.
It’s important to compare different interest rate options and do your research to find the best mortgage product for your financial situation and goals.
You may also want to consult with a qualified mortgage broker or financial advisor to get personalized advice.
How does the 5% deposit scheme for first-time buyers work?
The 5% deposit scheme for first-time buyers is called the First Home Loan Deposit Scheme (FHLDS). This scheme was introduced by the Australian Government to help eligible first-time buyers purchase a home with a deposit as low as 5%, without requiring them to pay for lenders mortgage insurance (LMI).
Here’s how the FHLDS works:
- Eligibility: To be eligible for the FHLDS, you must be a first-time buyer and meet certain income and purchase price thresholds. The income thresholds vary depending on the location of the property you are buying, and the purchase price thresholds also vary based on the property’s location.
- Application: You can apply for the FHLDS through participating lenders. If you are eligible and approved, the FHLDS will guarantee the portion of your home loan that is over 80% of the property’s value, up to a maximum of 15% of the property’s value. This means you can purchase a home with a deposit as low as 5% without having to pay for LMI.
- Repayment: You will need to repay the FHLDS loan over time, just like any other mortgage loan. The FHLDS loan is interest-free, but it will accrue interest if it is not repaid in full within a certain period (typically 30 years).
- Availability: The FHLDS is available on a limited basis, with a certain number of places allocated each financial year. Once all places are filled, you will need to wait until the next financial year to apply.
It’s important to note that the FHLDS is just one option for first-time buyers, and it may not be the best option for everyone.
You should compare different mortgage products and seek advice from a qualified mortgage broker or financial advisor to find the best product for your financial situation and goals.
At SB Experts- Mortgage & Finance, we understand the challenges that first home buyers face, and we’re here to help. We offer a range of home loan options that are tailored to the needs of first home buyers.