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Owner Occupier, Principal & Interest
A low variable rate loan for home buyers. No establishment or ongoing fees to pay. 100% offset account included. Allows for unlimited repayments, redraws and flexible repayment options.
A low variable rate loan for home buyers. No establishment or ongoing fees to pay. 100% offset account included. Allows for unlimited repayments, redraws and flexible repayment options.
Read our Mozo Review to learn more about the G&C Mutual Bank First Home Buyer Loan Special
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Owner Occupier, Principal & Interest, LVR 80-95%
Read our Mozo Review to learn more about the St.George Basic Home Loan Special Offer
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Read our Mozo Review to learn more about the QBANK FHBG Special Offer Classic Home Loan
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Owner Occupier, Principal & Interest
Read our Mozo Review to learn more about the Community First Bank Basic Variable Home Loan
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Advantage Plus, Owner Occupier, Interest Only, LVR >90%
Read our Mozo Review to learn more about the Unity Bank First Home Buyer Variable Home Loan
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Never owned property before? Congratulations, you're a future first home buyer.
First home buyers can have the odds stacked against them in the Australian property, between steep prices and a competitive market.
However, first home buyer home loans are designed to help you save costs and get on the property ladder.
Below, we run through everything you need to know to make sure you put your best foot forward.
Home loans come with a variety of features and costs, so here are the important things to look for when comparing first home loan options.
The interest rate is a lending charge on what you borrow. Interest is calculated daily and included in your mortgage repayment, whether it's weekly, fortnightly, or monthly.
A low interest rate is a crucial thing to what, since a high interest rate can significantly add to your home loan costs.
There are two main type of interest rates to compare:
Generally, variable rate home loans have lower interest rates and come with features that can help you save money.
Fixed rate home loans can be great for managing your repayments, they usually come with fewer features and you could face hefty break fees if you plan to exit your fixed loan early.
If you can’t decide between the two, you can opt for a split home loan. This lets you divide your loan into two accounts, one with a fixed rate and the other with a variable rate. Generally, you can nominate the percentage split, e.g. 60% fixed, 40% variable.
If you can limit the fees you pay, you can reduce the overall cost of your home loan (freeing up your budget to buy furniture and appliances for your new home). Fees can fall into two categories: upfront and ongoing.
Upfront fees include:
Ongoing fees include:
You may incur other fees, depending on your home loan, such as loan termination or loan discharge fees, which are payable at the end of the loan to transfer the title into your name.
You don’t want your first home loan to feel limited, so make sure you keep an eye out for any features that will make the path to home ownership much smoother. Here are a few of the main ones.
Depending on your lender, not all of these features will come free with the loan. So if you don’t plan to use them, consider opting for a no-frills home loan with a lower rate.
There's a lot of financial jargon that gets thrown around in with property buying and mortgages, and as a first time buyer it can all be a bit confusing.
Let's unpack some of the main terms you'll need to understand to get a great home loan deal.
The home loan deposit is the downpayment you make towards your home purchase. It establishes your home equity and your loan-to-value ratio (see more below) by giving you security and ownership of some of the property.
It’s recommended that borrowers have at least 20% of a property’s purchase price saved up for a deposit, though there are options for those who fall short of that requirement. See low deposit home loans.
Your loan-to-value ratio (LVR) is the amount you plan to borrow as a percentage of the total value of the property. Essentially, it's the size of your loan divided by the property value.
LVR (%) = Loan value / property value
For example, say you’re looking to buy a property valued at $500,000. If you have saved up 20% of the purchase price, you will have to borrow the remaining 80%. This means you’ll have an LVR of 80%.
In the past it was possible for first home buyers to borrow up to 100% of the loan amount but lending criteria was tightened following the GFC and the maximum amount major banks will now lend is up to 95%. (See no deposit home loans).
Home equity is the value of your home ownership. For example, if your home is valued at $1 million, and you own 80% of it because you've been paying off your mortgage, then you have 80% (or $800,000) equity.
Equity ($) = Property value - loan value
Equity is a form of wealth that can be used for a variety of things, from lowering your home loan interest rate to becoming a guarantor on someone else's mortgage and funding an investment property.
Borrowers who don’t meet lenders’ LVR requirements will have to purchase lenders mortgage insurance (LMI), which covers the home loan lender if you default on your loan.
LMI shouldn’t be confused with mortgage protection insurance, which protects the home loan borrower.
Just keep in mind that LMI is not transferable between loans. This means that if you want to refinance to another lender, you’ll need to have built up 20% equity in your home or you will have to pay the insurance again. This can negate any savings you'd make by switching loans.
Most mortgage lenders have a mandatory genuine savings policy, which means that as an applicant you need to demonstrate that you can save consistently and without outside assistance.
That means having a growing balance (at least three months worth) in a savings account, term deposit or managed fund, and not relying on things like a tax refund, government first home buyer grants, or gifts from family members.
The comparison rate combines the interest rate (the cost of borrowing) with any fees that you may have to pay upfront, such as application, valuation or ongoing fees for a home loan.
In essence, the comparison rate gives you a more accurate picture of how much your loan will cost, and banks and lenders are required by law to list it wherever their home loan interest rates are advertised.
Usually, the comparison rate is given in parentheses beside the headline rate. For example:
It’s important to note the comparison rate displayed by a lender is just an example, and it’s typically based on monthly and principal interest repayments on a $150,000 loan over 25 years. If you’re borrowing more or less than this, your comparison rate will be different.
Whether you are borrowing as an individual or you're sharing a mortgage with a partner, friend or family member, how much you will be able to borrow will depend on your combined income, current assets and liabilities.
To get a ballpark for how much you will be able to borrow from a bank or lender, try Mozo's borrowing calculator. Plug in your income and expenses, and it will tell you how much you can afford to borrow at today's average rate and how much your monthly repayments will be.
Another cost you will need to factor in to your home buying budget is stamp duty. This is a fee charged by state and territory governments in Australia. But did you know you could avoid this cost completely if you're a first time buyer eligible for your state's First Home Owner Grant, where you'll receive a one off grant and pay no stamp duty?
If you're not eligible for the first home owner grant, then you can use Mozo's first home loan stamp duty calculator which will give you an estimate of how much stamp duty will cost you on your first property.
Not sure how much your home loan will cost? Try our free home loan calculators to estimate. See more
If you’re over 18 years old, and you’re an Australian citizen or resident who has never owned property in Australia before, you would be considered a first home buyer. That means you would be eligible to take out a first home loan.
While bad credit won’t completely shut off all your options, you can expect higher interest rates and much fewer home loans to choose from.
So before you apply for your first home loan, it’s a good idea to obtain a free copy of your credit report to check your credit score. The next step would be to clear all of your debt, including any personal loans or credit card repayments you may have missed, so you can remove the red mark against your name.
Need help? Check out our guide to paying off credit card debt.
You can, and it’s also a good idea to review your first home loan a few years down the track to make sure you’re still getting a good deal with low interest rates.
Right here at Mozo! Scroll up to the table at the top of the page and start comparing a variety of first home loans to find a deal that suits you.
Once you have a more in-depth look at the table, you’ll begin to notice features mentioned in the guide above, including interest rates, comparison rates, fees, as well as additional benefits like free extra repayments and an offset account.
Select the home loan you want by clicking on the blue “go to site” or green “enquire now” button beside the product of your choice. You’ll then have the opportunity to apply for the loan through the lender’s site.
Start by preparing your documents and getting all the paperwork ready. Requirements will vary from lender to lender, but typically you’ll be asked to provide:
You’ll also need a clean credit record, although bad credit won’t necessarily rule you out.
If you’re an eligible first home buyer, it’s a good idea to complete your First Home Owner Grant application before applying.
And if you’ve decided to take out your first home loan with a guarantor, make sure they also have their documents prepared, including identification, income, assets and liabilities.
When budgeting for your first home, you’ll also have to factor in costs like:
Learn what you need to know about mortgages and money management in our helpful guides. See all
Get the latest on property market trends, interest rates, and lending news from Mozo's expert writers. See all
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Read full reviewThe representative is the reason for the positive review. Rebecca Wickham at BCU was attentive and patient.
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