Are you a first home buyer?

First home buyer

At a glance

While the process can be challenging, and at times, seem unachievable, the decision to purchase your first home is one that will set you up for the future. The important thing to remember is that you don’t have to navigate the unchartered territory on your own.

When purchasing your first property, don’t let yourself be overwhelmed by the experience. The process can be seamless and enjoyable when you tackle it in individual stages. From making the decision to purchase, to finding the right loan, saving for your deposit and finding and securing the perfect home. Step-by-step you can achieve your financial goals.

Did you know?

You may be eligible for a first home buyer grant or other incentives such as stamp duty and land tax reduction.

With the help of a guarantor, a loan can be secured without a deposit.

In December 2015, the average loan size for first home buyers was $348,100. Find out more about buying your first home.

Frequently asked questions

Traditionally you need at least a 20 per cent deposit to get a home loan. However, the amount you need to save is dependent on the loan to value ratio (LVR). LVR is the loan amount divided by the value of the property. For example, if you’re looking at a property with a purchase price of $200,000. If you have a deposit of $40,000, your LVR is 80% (160k/200k). 

If you don’t have a 20 per cent deposit, you will generally be required to pay for lenders mortgage insurance (LMI). Lenders mortgage insurance provides protection to the lending institution in the event that you default on your home loan. it is a one-off charge that gets included in your loan amount or is required to be paid upfront.

A guarantor can also volunteer their home equity as security for your loan. In the event that you default on your loan, your guarantor would wear the responsibility of paying off the loan.

Stamp duty is a charge which is applied by state governments in Australia  on transactions relating to the transfer of land or property. It is paid upfront and needs to be budgeted for in addition to your loan deposit. The amount of stamp duty you are required to pay differs in each state

The key to increasing your borrowing capacity is to reduce your debt. One of the easiest ways to achieve this is to lower your credit card balance, reducing the perceived risk to lenders.

You may be able to apply for a deposit guarantee (for up to 48 months). This is a second loan that covers the deposit.

Recent articles

Ari View Article

What Should I Be Aware Of When Taking Out A Mortgage?

March 01, 2016

Loans that seem too good to be true

If you think you’ve found a home loan that sounds almost too good to be true, unfortunately, it probably is. Here we look at some of the traps you should look to avoid in taking out a mortgage.

Free lunches

In the mortgage market, you come to expect certain things. e.g If you have a small deposit, you’ll pay more over the term of the loan; that having a bad credit history is going to cost you; that certain loans have certain interest rates, etc. So if you’re offered a home loan that seems much better than normal, look closely at the fine print. Free lunches are as rare in home loans as they are elsewhere in life.

Interest rate fixation

Most people looking for a mortgage are preoccupied with finding the lowest interest rate. But have you considered all the fees and charges, and the account flexibility you need? You need to consider the entire cost of the loan – not just the interest rate.

Ignoring mortgage fees and charges

Don’t ignore any fees or charges linked to a home loan; you never know how your circumstances may change. Upfront fees for taking out a loan and monthly fees are pretty easy to understand. But, are there other fees that you may incur? Will you be able to pay extra if you have a sudden windfall? Will you be charged if you decide to move or refinance your home loan? Can you increase your mortgage repayments?

Lack of flexibility

Different loans have different levels of flexibility i.e EFTPOS, internet banking, redraw facility. Ensure your home loan has all the features you want and don’t get locked into a Mortgage that will cost you if you change your mind.

Vendor financing

Some property developers offer “vendor financing”. This may seem attractive because you don’t have to deal with a lender, or because they’re willing to give you a loan when others won’t. But be careful you’re not paying above market rates – for the property or your mortgage.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as finding the lowest interest rate. You need specialist help – the sort of help you get from an MFAA member. They are the Essentials of Borrowing. Talk to an MFAA member today.

If you think you’ve found a home loan that sounds almost too good to be true, unfortunately, it probably is. Here we look at some of the traps you should look to avoid in taking out a mortgage.


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