First Home Owners Grants
First Home Owners can choose from a variety of home loans to finance their first purchase. First home buyers can also, if eligible, claim government grants and concessions, that all help to make buying a first home more affordable.
First Home Buyer Grants
First Home Buyers should check to see if they are eligible for the first home owners grant. This is a government grant that helps first home owners into their first home. The boost to the grant is due to end as of 31 December 2009, and will no longer be available. The original first home owners grant of $7,000 is still available to eligible first home buyers after this date.
The scheme is provided by the Federal Government and is aimed at helping first home buyers onto the property ladder. The grant was increased as part of the government's stimulus package in 2008 but is now winding back to the original $7,000.
The NSW First Home Buyers Supplement will be available until 30 June 2010 and the $7,000 First Home Owner Grant and the First Home Plus schemes will continue to be available after 30 June 2010.
For more information on what you can claim as a first home buyer, contact your nearest mortgage broker.
This grant may also be complimented by stamp duty concessions. These concessions vary in each state, but can save home buyers as much as $15,000 in some states.
First Home Loan
The types of loans available to first home buyers include:
This type of loan is typically very flexible and allows you to take full advantage of benefits such as flexible repayments and redraw facilities. The interest rate is usually a little higher than a basic loan because of the extra features, but the rate is often still quite competitive. Mortgage rates generally come down or go up, depending upon the economy so, this type of loan obviously carries some risk.
This is the ‘no-frills’ approach to mortgages. If you are not interested in added features but still want some flexibility with the interest rate then the basic variable rate home loan is for you. The basic variable rate home loan has a lower interest rate than a standard rate loan, but does not offer the same level of features, in fact, many basic home loan have no features, thus keeping the interest rate very low.
Those home owners who like knowing what they are paying each month often choose a fixed rate home loan. If interest rates look likely to rise over the coming few months or years, it is worth considering a fixed rate. The rate is fixed for anything between one and 10 years, and the rate will remain the same regardless of what happens to other rates. Often the fixed rate is comparable to the current variable rate, although at the moment fixed rates are lower than variable rates, so you can save money right now as well as locking in security for the next few years.
Worried about getting it right for your first home? Consider a split rate home loan. You can fix say, 60% of the loan, leaving the remaining 40% of the loan variable. This means that if rates change, only 40% of your home loan is affected. It offers home owners a chance to protect part of their loan, while leaving the rest of the loan available to savings should the rates fall. The split can be 50/50 or 60/40 or sometimes 70/30.. it’s up to you and the lender to negotiate. And the length of the loan is usually around three years, after which time the whole 100% of the loan reverts to the current variable rate unless you renegotiate to extend the split rates.
The “honeymoon” home loan is incredibly tempting to first home buyers. The beginning period – usually between six months to one year – sees you paying a very low interest rate, sometimes as much as 1% lower than other home loans. This enables new home owners to easily afford repayments and adjust to the mortgage over time. But, when the introductory period ends, the low rate ceases and you may end up paying more. Check what the rate will revert to once the honeymoon period is over and factor this in when making your decision.
What if you do not have a deposit for a home? No-deposit home loans offer borrowers a chance to purchase a property without the need to put down a deposit. Instead, you borrow the full amount of the property price. Because you are borrowing 100% of the purchase value your repayments will be higher. Plus, the interest rate on your mortgage will be higher than a standard home loan, so you do need to consider whether you can afford the higher repayments. You will likely be charged Lenders Mortgage Insurance (LMI) when you borrow more than 80% of the property price, which can be as much as $2,000, so these extra costs need to be factored into your budget. A no-deposit home loan is an attractive option to first home buyers, who may not have savings, but can afford the monthly repayments.
For more first home buyer information contact your local mortage broker on
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