A Comprehensive Guide For First Time Home Buyers in Australia
Getting your own house can be a daunting endeavor for many, especially if you are a first time home buyer. There’s just so many things to do and to consider to make this major undertaking a success.
Generally speaking, home loans are specifically designed for individuals who are looking at getting their own house or property. It is the most popular way towards home ownership in Australia.
Home loans are typically long-term loans that last for 20 to 30 years. Since getting home loans is generally a long-term commitment that is primarily taken out by individuals primarily towards owning a house, choosing which home loan type that fits your need is important.
In most cases, it allows the home buyers to only shell out 20% for deposit and the loan is secured with the house. Mortgage repayments are done monthly or fortnightly. In this article, common routes to owning your first home are briefly discussed.
Home loans types
Depending on your needs, there are specific types of loans just for that.
Whether you’re a first-time home buyer or a seasoned investor or a senior looking at cash to finance your daily expenses, there’s a specific loan type for you.
Things to consider
Interest rates, fees, charges
Home loans vary in terms of interest rates, associated fees, and features.
Make sure you talk to one of our brokers and discuss which home loans best fit your needs based on these things.
Deposit
A 20% deposit is usually required. On some occasions, this could go as little as 5%.
READ MORE: Buying Property For Investment In This Volatile Economic Condition
To know more about deposit requirements, talk to your broker today.
Purpose of the loan
Also, most importantly, you need to know your purpose of getting a home loan.
Different home loans are designed for specific needs. There are home loans that are ideally designed to young couples, as a second mortgage, investment, among others.
First Home Owner Grant (FHOG)
You can access a $10,000 grant if you buy or build your first house. This amount can go up to $20,000 if you plan to purchase a house built in regional Victoria.
This grant is not accessible to investment and vacation houses.
First home super saver scheme
This scheme was initiated by the Australian Government in a bid to make home ownership for first time buyers more accessible.
You can access up to $30,000 of your super for your valid contribution period, which you can use to purchase your first house.
You need to lodge (your broker can also do this on your behalf) a request to release your contribution to be used in purchasing your first house.
Fixed-rate home loan
Fixed-rate home loan is ideal for beginning homeowners as the interest rate is fixed for a predetermined period of time. You can fix your mortgage for 1, 3, 5, and in some lenders, 10 years.
READ MORE: Owner Builder Loan This Pandemic: Is It Worth It?
This system will allow you to adjust with your budgeting during the lock-in period.
After that, your mortgage will revert to variable rate.
HomeBuilder Scheme
Another home loan option that is ideal for first time home owners is the HomeBuilder Scheme, which was launched by the Australian government mid 2020 in a bid to stimulate the housing market amid the pandemic.
With this scheme, first time home owners can borrow as much as $15,000--money that can be used for building their first house for substantial renovations.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today!
Generally speaking, home loans are specifically designed for individuals who are looking at getting their own house or property. It is the most popular way towards home ownership in Australia.
Home loans are typically long-term loans that last for 20 to 30 years. Since getting home loans is generally a long-term commitment that is primarily taken out by individuals primarily towards owning a house, choosing which home loan type that fits your need is important.
In most cases, it allows the home buyers to only shell out 20% for deposit and the loan is secured with the house. Mortgage repayments are done monthly or fortnightly. In this article, common routes to owning your first home are briefly discussed.
Home loans types
Depending on your needs, there are specific types of loans just for that.
Whether you’re a first-time home buyer or a seasoned investor or a senior looking at cash to finance your daily expenses, there’s a specific loan type for you.
Things to consider
Interest rates, fees, charges
Home loans vary in terms of interest rates, associated fees, and features.
Make sure you talk to one of our brokers and discuss which home loans best fit your needs based on these things.
Deposit
A 20% deposit is usually required. On some occasions, this could go as little as 5%.
READ MORE: Buying Property For Investment In This Volatile Economic Condition
To know more about deposit requirements, talk to your broker today.
Purpose of the loan
Also, most importantly, you need to know your purpose of getting a home loan.
Different home loans are designed for specific needs. There are home loans that are ideally designed to young couples, as a second mortgage, investment, among others.
First Home Owner Grant (FHOG)
You can access a $10,000 grant if you buy or build your first house. This amount can go up to $20,000 if you plan to purchase a house built in regional Victoria.
This grant is not accessible to investment and vacation houses.
First home super saver scheme
This scheme was initiated by the Australian Government in a bid to make home ownership for first time buyers more accessible.
You can access up to $30,000 of your super for your valid contribution period, which you can use to purchase your first house.
You need to lodge (your broker can also do this on your behalf) a request to release your contribution to be used in purchasing your first house.
Fixed-rate home loan
Fixed-rate home loan is ideal for beginning homeowners as the interest rate is fixed for a predetermined period of time. You can fix your mortgage for 1, 3, 5, and in some lenders, 10 years.
READ MORE: Owner Builder Loan This Pandemic: Is It Worth It?
This system will allow you to adjust with your budgeting during the lock-in period.
After that, your mortgage will revert to variable rate.
HomeBuilder Scheme
Another home loan option that is ideal for first time home owners is the HomeBuilder Scheme, which was launched by the Australian government mid 2020 in a bid to stimulate the housing market amid the pandemic.
With this scheme, first time home owners can borrow as much as $15,000--money that can be used for building their first house for substantial renovations.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today!
