What should first home buyers look for in a home loan and how do you find the most appropriate loan for yourself? First home buyers, historically, have always been up against it, especially as property prices and rents increase, making it increasingly difficult to save up a decent deposit for your dream home.
Despite many banks recently increasing interest rates on home loans, there are still some great offers available to first home buyers at the moment. You just need to know where to look. We take a look at some of the special offers that are on offer at the moment through our exclusive first home buyer mortgage broking service – FHBA Mortgages:
1. Big 4 bank Special 2 year fixed rate¹
One of the big 4 banks is offering first home buyers a record low 3.69% per annum fixed rate for two years, for owner occupier, principal and interest loans. This compares to their current advertised 2 year Fixed Rate for Home Loans rate of 3.98% per annum for all other owner occupiers.
This is the lowest rate ever, offered by a big 4 bank for a 2 year fixed rate and it is only available to first home buyers.
2. Big 4 bank Special 3 or 5 year fixed rate
This offer is only available for all applications (or pre-approval applications) submitted prior to 21 April 2017. A member of the big 4 banks is currently offering a rate of 3.99% for your choice of a 3 or 5 year fixed period.
The following criteria will apply:
- For owner occupiers only
- Principal & Interest repayments
- Valid for applications submitted prior to 21 April
3. Low Deposit Home Loan + LMI Capitalisation²
One lender on the FHBA Mortgages panel is offering a special low deposit home loan with a 5% deposit and allowing you to borrow up to 97% including Lenders Mortgage Insurance (LMI).
The product comes with the following features:
- The 5% deposit must be made up of genuine savings or 6 months rental payments history. Genuine Savings must be savings or shares that you have held or accummulated over a period of 3-6 months
- LMI can be capitalised onto the loan up to 97% of the property purchase price (first home buyers only)
- For owner occupiers only
- Competitive fixed and variable rates
4. Non Genuine Savings + LMI Capitalisation + Using FHOG as deposit
There are still some products available that allow first home buyers who are looking to buy a First Home Owner Grant (FHOG) eligible brand new home to use their State’s Grant to form part of the deposit. Whilst these products tend to come at a cost, i.e. higher interest rates & risk fees³ these products are suitable for those looking to get into the market sooner and potentially refinance down the track for a better product:
- The 5% -10% savings can be made up of a mixture of savings and the FHOG (FHOG only available for new home purchases or builds)
- LMI or a Risk Fee will apply and you can add this fee onto the cost of the loan
- These products have higher interest rates
Glossary of Terms:
¹Fixed Rate – A fixed interest rate loan is a loan where the interest rate doesn’t change during the fixed rate period of the loan giving you certainty in your repayments
²LMI Capitalisation – Whereby the Lenders Mortgage Insurance premium is not paid upfront by the borrower but instead added onto the total loan balance and therefore paid over the term of the loan by the borrower
³Risk Fee – A Risk Fee (referred to as equalisation fee by some lenders) tends to be different to LMI in that it is a fixed percentage of the loan value or a fixed dollar amount. It usually applies where the lender is offering a unique product and therefore charging a risk fee to compensate them for the risk they are taking in lending the money to you
Are you looking to compare these different home loan products? Perhaps you just want to know your borrowing capacity or get a better understanding of how your first home loan works? Click here to speak with an FHBA Mortgage Broker.
In more exciting news, we are proud to announce that we will soon be launching a weekly segment which will feature our ‘First home buyer home loan of the week’, proudly brought to you by FHBA Mortgages
Disclaimer: The information on our website including this page is general in nature and should be solely relied upon. The advertised rates above were true and correct at the time of the publication. The rates do not take into account other fees and charges which you should also consider. Depending on your circumstances you may or may not be eligible for any of the individual loan deals. The credit license responsible for the mortgage service offered to clients is Mortgage Australia Group Pty Ltd, Australian Credit License (ACL) number 377294, Australian Business Number (ABN) 99 091 941 749. Mortgage Australia Group Pty Ltd is a member of the Mortgage & Finance Association of Australia (MFAA). FHBA Pty Ltd is an authorised credit representative of Mortgage Australia Group Pty Ltd.
First Home Buyers Australia