First Home Buyers
We enjoy making loans easy for First Home buyers
At Best Home Loans, we enjoy making loans easy for home owners, property investors and businesses. With our extensive knowledge of loans, we continually achieve client satisfaction with our superior service when we help them choose a loan or mortgage that best meets their needs.
First Home Buyers
Buying your first home should be an exciting and satisfying experience and with a little knowledge and preparation there is no reason why it shouldn’t be. There are a number of things to be aware of ranging from the various government benefits for first home buyers to understanding the requirements of obtaining loan finance. Don’t be worried about the number of things to consider … that’s where Best Home Loans come in. We will talk to you about your eligibility for the First Home Owners Grant, Stamp Duty Exemption schemes, the deposit amount required, your loan capacity and repayments. We will make the process as easy for you as possible.
Types of Loans
Basic Home Loans
The Basic Home Loan is a variable loan product that is not as highly featured as the Standard Variable home loan. The biggest advantage of this home loan is its rate of interest. One of the simplest ways to own your home sooner is to pay the lowest rate possible and as few bank fees as possible. If you don’t need the ‘bells and whistles’ that come with many loans (at a price), then a basic home loan could be the answer.
Lower Interest Rates
Popular with first home buyers, basic home loans typically offer interest rates of half to one per cent below the standard variable rate. Many also have lower ongoing fees. In return for a lower interest rate, basic home loans have fewer features and can be less flexible. Some lenders may offer the option to pay for extra features when you need them. There may also be fees and charges if you decide to switch loans or lenders, or pay off the loan sooner.
At a Glance
- lower interest rates
- lower ongoing fees
- minimal features
- less flexibility
- no additional repayments
- for owner/occupiers only
Fixed Rate Home Loans
If you’re worried about rising interest rates, then a fixed rate home loan may be the solution. Fixed rate home loans offer a fixed interest rate for a set period of time. Because of this, repayments remain the same for the duration of the fixed rate period, usually between one and five years. At the end of the fixed period, you can switch to a variable rate loan or negotiate a new fixed rate or even opt for a split rate loan.
Stability – fixed repayments allow you to plan your finances and stick to your budget, even in times of economic uncertainty. Cost – when interest rates rise, repayments won’t increase. However, fixed loans generally have limited features and often charge hefty fees for early payout or for making additional payments.
Time to Fix
Knowing when to fix and when to float is difficult. Even the best economists can’t predict with absolute certainty when interest rates will rise or fall. For this reason, many borrowers opt to fix for periods of less than three years. That way if rates do fall, you are only paying a higher rate of interest for a relatively short period. When considering a fixed rate home loan, spend some time researching recent rate movements, speak to your lender about where rates are headed and brush up on your general economic news. As a rule of thumb, it is best to fix at the bottom, or near the bottom of an interest rate cycle before rates start rising again.
At a Glance
- monthly repayments remain the same
- interest rate fixed
- some lenders charge hefty exit fees
- less flexible features
- limited repayment and redraw options
Standard Variable Home Loans
A standard variable rate home loan is one of the most popular mortgages around. For many borrowers, a standard home loan offers the right mix of features, flexibility, interest rate and fees. This type of loan is particularly suitable if you want to make extra repayments without penalty, split your loan or access a line of credit. In return for these benefits, a standard variable rate mortgage will have a higher interest rate than a basic home loan.
At a Glance
- repayment flexibility
- ability to make additional repayments
- redraw facility
- split loan feature
- may offer direct deposit salary, rental or dividend income, credit/debit card and line of credit facility
- can be used for building purposes
- higher interest rates
Credit Impaired/Non-Conforming Home Loan
Had credit problems in the past? Don’t fit lenders’ traditional criteria? Don’t despair. With today’s wide range of home loans and lenders, even people considered ‘credit impaired’ can now apply for a home loan. These loans, known as non-conforming home loans, are specifically designed to suit people who are:
- self employed
- no longer working full-time and/or retirees
- seasonal workers
How They Work
Non-conforming home loans work like most other loans. Borrowers can choose from a range of loan types including variable, fixed and split rate loans and popular features such as line of credit, redraw and offset. Because credit impaired and non-conforming borrowers are regarded as higher risk, most lenders charge a slightly higher interest rate and/or a higher fee structure than for traditional loans. Non-conforming loans can also be less flexible (particularly when it comes to refinancing).
Low Document Home Loan
What is a low doc home loan? It’s a mortgage created for the self-employed. If you’re self-employed, you may have found it difficult to get a traditional mortgage. Don’t despair. The low doc home loan has been designed specifically for the self-employed. If you’re self-employed, the goal of your accountant is to minimise your taxable income. Unfortunately, while this means you pay less tax, it creates problems when you try to borrow. While you might know that you can service a loan, your books don’t back you up, or your paperwork may not be up-to-date. As a consequence, the self-employed often find it frustrating to obtain a Home Loan. While the self-employed often can’t satisfy traditional lending criteria, they can be perfectly capable of servicing a loan. As a consequence, the low doc or lo doc loan was born. Low doc loans don’t require the same level of “documentation” as normal loans. If you have difficulty documenting your financial position with regular pay slips, tax returns or business financials etc, a low doc mortgage could be a good solution if you can substantiate your income by providing alternative paperwork.
At a Glance
Low doc loans are available through brokers, banks and non bank lenders. Even with a lo doc loan, only borrow through someone you can trust. And that means a member of MFAA – they are the Essentials of Borrowing.
- can only borrow up to 80 per cent of the property value
- may require lender’s mortgage insurance, adding to the cost of the loan