Finding, applying, and paying for your first home loan can sound intimidating, but you don’t have to go it alone.
You may be able to get help from the following sources:
If you’re not sure which bank offers the best first home loan deal for you, you could consider getting in touch with a mortgage broker.
These home loan experts can:
- Recommend you specific home loans, based on your financial situation
- Negotiate with banks on your behalf to help you secure better deals
- Tell you about special mortgage offers that aren’t typically advertised
- Manage much of the paperwork for you
Using a mortgage broker to apply for mortgage pre-approval is usually free, as the broker is paid a commission by the bank or lender if the loan application is successful.
Solicitors, lawyers and other legal specialists can (for a fee) manage the process of transferring the title of your first property from the seller to the buyer. Both the buyer and the seller will often hire a conveyancer to help handle a property sale.
Because property sale contracts can be complex and may include special terms and conditions depending on your state or territory, a conveyancer can help to minimise your risk of legal problems when buying your first home.
If you’re struggling to save a home loan deposit, or if you’d like a home loan with no deposit, you may be able to get help from a guarantor. This is a close family member (usually a parent or grandparent) that uses the value of their own property to guarantee part or all of your home loan deposit. If you default on your home loan, your guarantor will become responsible for your mortgage payments.
Becoming a guarantor is a big commitment, so it’s important for everyone involved to be aware of the risks. However, once you’ve spent some time paying off your mortgage, you may be able to refinance your loan and release your guarantor.
Home Guarantee Scheme
First introduced in 2020 as the First Home Loan Deposit Scheme (FHLDS), this Australian government initiative allows you to apply for a mortgage from selected lenders with a deposit as low as 5% (or even 2% for single parents), with the government guaranteeing the rest so you don’t need to pay LMI.
A limited number of spots are available in the scheme each financial year, and to be eligible your income must be under the maximum threshold ($125,000 per annum for singles, or $200,000 per annum for couples). The property you’re purchasing may also need to fulfil eligibility criteria. Plus, a limited number of lenders participate in the scheme, so you may not be able to apply with your preferred bank.
Lenders regularly include special deals and incentives with their mortgages to help attract new home loan customers.
You may be offered:
- Discounted interest rates for a limited time (sometimes called “honeymoon rates”)
- Waived fees
- Bundled credit cards or other financial products
- Discounted or waived LMI fees
Keep in mind that you’ll need to fulfil the lender’s eligibility criteria for its special offers. While some incentives are meant for first home buyers, many others are intended for refinancers or investors. Be sure to read the terms and conditions before you apply.