If you’re a first-time buyer, chances are you’re looking for a competitive mortgage to help fund your purchase. To ensure they receive a product that aligns with their needs, many first home buyers opt to take out a first-home buyer loan.
A first-time home buyer loan is a home loan that is specifically designed for individuals who are buying a home for the first time. While they may be a specific kind of loan, first-time buyer loans have the same features as a standard home loan, including an interest rate, fees and a fixed loan term. These loans also go through the same analysis as a second buyer. If the deal requires Lender’s Mortgage Insurance (LMI), the credit standards are actually tighter!
For that reason, many brokers in Australia will not consider clients with less than 20% deposit. Although not something to be deterred by, it is generally harder to deal with. If you are looking to apply for a first-home buyer loan with a deposit below 20%, the mortgage brokers at Capta Financial can guide you through the process.
Buying your first home can be a mixed bag of emotions. On one hand, it can be very exciting to undertake an investment and move into your own space. On the other hand, the responsibilities and costs associated with purchasing your first house, and paying off a first-time home buyer loan, are not matters that a first-home buyer should take lightly.
Luckily, the experts at Capta Financial can help you get the specialised first-time home buyer loans you need, guiding you through the paperwork and making everything easy to understand along the way.
How does a first-time home buyer loan work?
A first-time home buyer loan is actually not that different from a traditional home loan, the only difference being that this type of loan is geared mainly towards first-home buyers. A lot of banks and lenders are happy to work with first-time home buyers provided that they will fit in the lender’s policy and credit appetite. Some may even provide lower rates, fees or sign-up bonuses for first-time home purchasers.
On the other hand, lenders will often provide the same products to first-time home purchasers as they do to people who already own a home. This applies to both prospective owner-occupied borrowers and prospective investors although they may also use somewhat different lending requirements for first-time home buyers.
You should also keep in mind that if you take out a home loan with a deposit that’s less than 20% and no guarantor, you might need to pay for Lenders Mortgage Insurance (LMI). This is a one-time payment that borrowers who are deemed “risky” by lenders need to make on settlement in order to safeguard the lender’s repayments from defaults. The size of the LMI you need to pay will depend on the size of the deposits, with smaller deposits warranting larger LMIs.
When should you take out a first-time home buyer loan?
Your overall income is probably one of the most important factors you should consider, as it impacts your borrowing capacity — the amount a lender will approve you to borrow. A healthy income can ensure you can comfortably make repayments without sacrificing your way of life. You also need to consider whether or not you are at that point in your life where you’re willing to take such a long-term financial responsibility.
Although good or bad credit history affects how you look for more competitive loans, your credit history does not have that great an impact on your capacity to secure a first-time home buyer loan.
If you need help deciding if it’s the right time for you to get a first-time home buyer loan, feel free to contact us for a financial specialist’s advice.
What do you need to take out a first-time home buyer loan?
The requirements necessary to take out a first-time home buyer loan are often the same as a traditional home loan:
- Borrowing Capacity — the amount a lender will lend you to buy a property.
- Funding Position — a calculation that adds up all the costs of buying (or refinancing) a property, and then subtracts the funds you have for a deposit.
- Acceptable security — something that will serve as collateral that the bank can take possession of should you default on payments. This is often the house itself.
The most common requirement is that you’re above 18 years of age and a permanent resident of Australia. Your average income and expenses will also be totalled to determine whether or not you’re capable of making repayments.
Discover your first-time home buyer loan with Capta Financial today!
If you’re looking to get the home of your dreams, one of the first things you’ll need to do is find the right home loan. This is easier said than done though since first-time buyers are spoilt for choice, as there are so many various types of lenders to choose from.
Capta Financial understands this and strives to support you every step of the journey, from pre-approval through settlement. We are composed of a team of financial experts who take the time to get to know you in order to come up with the best first-time buyer home loan for you and your family. Being a first-time buyer can be nerve-wracking, but with Capta Financial, it doesn’t have to be.
Take the first step towards homeownership by finding your first home buyer loan today. Learn more about our services or contact us to see how we can help you secure the right first-time home buyer loan you need!