Buying Your First Home
- Currently there is a $10,000 First Home Owners Grant for the purchase of a newly constructed home or home to be built in Metropolitan Melbourne Victoria. If purchasing in regional Victoria you may be eligible for a $20,000 grant. The Application Form and Lodgement Guide will help determine your eligibility.
- First home buyers will normally require at least 5% of the property price in savings held over a three month period (this is called genuine savings). There are costs involved including registration of mortgage, property searches, legal fees, stamp duty, council and water rate adjustments and owner corporation fees if applicable.
- As of 1st of July 2017, Victorian Government has abolished stamp duty for first home buyers for property purchases of up to $600,000.
- Some lenders will allow rental history to be taken as genuine savings;
- Lenders Mortgage Insurance (LMI) will normally be charged once you borrow over 80% of the cost of the property. This is a once off cost paid by you, the borrower, and used by the lender to cover the insurance premium which in turn will cover any losses the lender may incur.
- LMI cost can be higher without genuine savings.
Types of Loans
- Standard Variable Home Loans:The rate will change (up or down) when the lender changes their rates.
- Fixed Rate Home Loans: You can fix your rate so it stays the same for a particular term; usually from 1 to 10 years. This will help if you are on a budget, you will know exactly how much the repayments will be over the chosen term. It will revert to a variable rate after the nominated fixed term period unless you elect to fix the rate again.
- Split Home Loan (part fixed, part variable): Hedging your bets, the fixed portion will allow you to know your required repayment while the variable loan portion can increase your repayment if rates increase, and a rate drop will decrease your repayment due to a drop in rates, or the rate may decrease and you benefit from the rate drop.
- Basic Variable Home Loans:These are referred to as 'no frills' loans. They generally offer a lower interest rate, but with less features than a standard variable rate home loan.
- Line of Credit Home Loans:This is similar to a huge credit card. There is a limit and you only pay interest on the amount you draw down. Interest is calculated from the day that money is drawn.
- Low Doc Home Loans: Provides flexible financing solution for self-employed people.
- Mortgage Offset Account:100% Offset Account is a savings transaction account which can be linked to a home loan account, i.e. where the savings in the account offsets the interest paid on the home loan.
- Professional/Wealth Packages:Bundle together various products with your lender, including credit cards, personal loans, and savings and transaction accounts, generally for one annual fee.
Bridging Loans: Allows a buyer to complete the purchase of a new property before selling their existing property.