Home Loans for First Home Buyers

Published November 3rd, 2010

There are home loans specific to first home buyers though finding the right one can be a dizzying prospect for many first time borrowers. With so much information available it is difficult to determine fact from fiction much of the time, there are some contradictions that might make a potential new borrower feel perplexed. There are some things though that should be considered when looking for a new loan.

First, an initial five to ten percent deposit is required before the home loan can push through. This initial deposit tells the lender that you are serious in purchasing the property. However, this deposit fee is non-refundable and bigger deposits are requested for bigger and expensively constructed properties.

Home loans also have extra costs for processing of documents and application expenses. If the amount that you are going to borrow is 80% of the total cost of the property, it is important that you have mortgage insurance. Home loans also have stamp duty fees and conveyancing costs for property inspection. Though there are so many extra expenses, these are all useful and important.

The amount that you can borrow will depend on your savings. If you feel like you have saved enough and that you are financially stable, you can apply for loans with higher amounts. However, you must always consider market changes and you must apply for a loan that you can comfortably pay despite imminent rate hikes.

And last but not the least; you must determine on the loan term that you want. First home buyers must also consider whether they want a fixed or variable loan. Fixed home loans have a fixed monthly amount despite interest rate changes while variable home loans follow the RBA cash rate changes.

More borrowers choose variable home loans due to the possibility of lower monthly repayments and the increased repayment flexibility such as the redraw facility. On the other hand, fixed home loans give repayment security especially in times when volatile market changes causes the rates to rise.

First Home Owners:

If your looking for some free tools and resources to learn more about buying your first home, below are a few quick links to help research buying your first property.

First home buyer tools are available at echoice.com.au from how much can you borrow calculators, the types of home loans available and home loan comparisons.

The official first home owners grant website is located at: http://www.firsthome.gov.au/

For more details on interest rates visit the reserve bank of Australia: http://www.rba.gov.au//

Bank Loans

eChoice Home Loans