Is there such a thing as a special mortgage for first home buyers?

When you haven’t purchased property before, it’s difficult to understand exactly what is and isn’t right for you. That applies to properties, home loans and even savings strategies. Fortunately, we’ve got some tips from our mortgage brokers on finding a home loan that’s suitable for the Australian first home buyer (FHB).

Making your home ownership dreams a reality starts with the right loan.Making your home ownership dreams a reality starts with the right loan.

Fixed interest rate

Fixed interest rate loans are attractive to FHBs because they provide stability. The interest rate is fixed for a term, so you know what your repayments will be, unlike variable rate loans, which float with market changes. When the fixed period is over and you know what it’s like to live with a mortgage, you can set another term or switch to a variable rate mortgage.

Family guarantee and limited guarantor loans

Nearly one-third of FHBs are looking to parents or inheritance to buy a house, according to CoreLogic’s Housing Affordability Survey.

Many parents want to help make their children’s home-buying dreams a reality. Sometimes, however, money lending can put a strain on personal relationships. That’s why we recommend going about it formally. With these loans, your family member can either offer the security, or sign on as a guarantor in case you’re ever unable to make payments.

Offset rate mortgages

With offset account mortgages, you offset other accounts against your mortgage. That means your EFTPOS, cheque transactions, Internet banking and credit transactions can all be linked to an account offset to your loan. The more money in that account, the more will be reduced from your principal, thus reducing interest.

Low doc loan

In the past, it was difficult to get a mortgage if you were self-employed or worked in a non-traditional job. Fortunately, low doc loans have made it a bit easier. If you can’t provide proof of your income – maybe you just entered the workforce, are self-employed or work as a freelancer – you can still get a loan without the standard verification policies. Low doc loans can still be a hassle, so you’ll want to work with the right adviser.

Any buyer can benefit from expert home-buying advice, but FHBs should definitely consider using a broker to save time, money, and help navigate the process.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.