First Time Home Buyer

If you’re a first time home buyer, there are literally hundreds of home loans to choose from to help you into the home of your dreams.

Typically you’ll choose from ‘variable rate’ and ‘fixed rate’ home loans, while it’s a fair bet many first timers will also consider a loan with a ‘honeymoon rate’ attached.

Variable Loan

This is a popular home loan choice for first time home buyers in Australia. Variable mortgages adjust with the ebb and flow of the official cash rate set by the Reserve Bank of Australia. In the long term, they are often cheaper than fixed rate mortgages.

Fixed Rate Loan

The advantage with a fixed rate mortgage is that the interest rate is set for a period of time, which is generally terms of 1, 3 or 5 years. This provides a first time home buyer with peace of mind, knowing what their mortgage repayments will be on a regular basis.

Honeymoon rates

Lenders targeting first time home buyers will frequently offer a cut-price rate over the course of a “honeymoon” period, which is usually 6 to 12 months. However, when the initial period is over, the loan rate reverts to a standard variable rate, which is generally higher than the honeymoon rate.

Given the broad range of home loans available to a first time home buyer, it is important to do the research before signing up to a mortgage. For the best mortgage rates available see our compare home loans table.

Government subsidies

Apart from lenders, our state and federal governments are also doing their bit for first time home buyers.

First Home Owners Scheme

A Federal Government initiative, the First Home Owners Scheme (also called the ‘First Home Owners Grant’) encourages first timers to enter the property market with a grant of $7000. The grant can be used to beef up a deposit or pay other costs such as stamp duty or legals. For more information on the First Home Owners Scheme go to www.firsthome.gov.au.

In addition to the Federal scheme, some states and territories offer bonuses and stamp duty concessions.