Getting your first home loan structured right and inline with your financial goals is imperative. The right structure will save you more money over time compared with a few percentage points in interest rate.
Our brokers are more than just lending specialists. Our brokers don't approach setting up a first home loan as a once-off transaction like so many of the banks do. We're not trying to sell a product either. Instead, we educate you and get you to consider your financial goals including options you may never have considered.
Current Lending Policies for First Home Buyers
Maximum Loan to Value Ratio (LVR) without Lenders Mortgage Insurance (LMI) is 80%
Maximum LVR inclusive of LMI is 95% with most lenders, however, we have major lenders currently offering up to 98% inclusive of LMI.
- Genuine Savings - required when LVR exceeds 90%. Lenders want to see 5% of the purchase price saved in your own account for minimum 3 months. These funds can be gifted as long as they are held in your own account for at least 3 months.
- Lenders Mortgage Insurance (LMI) can be waived by using a Limited Guarantee / Family Pledge loan structure
- LMI waiver is available for specific professions up to 90% LVR. These include solicitors, barristers, medical practitioners, dentists, vets and some other professions
There are three basic types of home loans on todays market. Which is right for you will depend on many factors including how you spend your money, whether the property
- Basic Home Loan - as the name suggests, a basic home without the frills. Usually attracts a slightly higher rate than a pro-pack but with nil ongoing fees. Basic loans do not usually offer fixed interest rate discounts off the lenders standard variable rate (SVR), instead they just go off an advertised "headline" rate. Basic loans don't offer linked 100% offset accounts or credit cards where card fees are waived. Usually economical for a loan amount of <$250,000 where an individual doesn't have a need for 100% offset and can use free redraw.
- Professional Pack Home Loan with 100% Offset - packages usually include a fixed discount to the lenders SVR (built in for life of loan and can be negotiated in the future), a linked 100% Offset Account and a fee-free credit card. These loans attract annual fees with all major banks from $375 p.a. - $395 p.a.). Usually more economical for loans >$250,000 because additional interest saving outweighs the annual fee, also convenient for clients who want 100% offset account and credit card with one lender.
- Line of Credit - Designed for clients who want to have all their income directly credited to the line of credit and pay their expenses out of it as well. Minimum repayments are interest only. If the loan is paid down to zero, the loan does not cancel out, but instead remains available until the loan is closed by the client. Lines of credits are more flexible but also attract a higher standard variable rate with most lenders. Cannot be fixed.
Before you decide which loan type is right for you, consider some of the following ideas.
- Is the home you are purchasing going to be the forever home, or would you consider using it as investment property in the future?
- Is your income likely to grow strongly over the next 5-10yrs and eventually cause a need for you to minimise tax?
- Are you a good saver?