Home Loan

About Home Loan

Home loans, also commonly called mortgages, are a common way for individuals to finance the purchase of a residential property.

Buying a home

Here are some key points about how home loans operate

Borrowing

When you apply for a home loan, you borrow a specific amount of money from a lender to purchase a property. The amount you can borrow depends on various factors, including your income, expenses, credit history, and the value of the property.

Interest Rates

Home loans typically come with either a variable interest rate or a fixed interest rate, or a combination of both. A variable rate can change over time, while a fixed rate remains the same for a predetermined period. The interest rate determines the amount of interest you'll pay on the loan.

Repayments

Owner Occupier Home loans, that’s where the owner lives in the property, are usually repaid in regular instalments over an agreed loan term, which is often 25 to 30 years. Each repayment includes both principal (the amount borrowed) and interest (the cost of borrowing). The frequency of repayments can usually be monthly, fortnightly, or weekly.

Loan Terms

The loan term is the length of time you have to repay the loan in full. Shorter loan terms typically result in higher monthly repayments but lower overall interest costs. Longer loan terms can lower monthly repayments but result in more interest paid over the life of the loan.

Deposit

When purchasing a property, most lenders in Australia require a deposit. The deposit is a percentage of the property's purchase price and serves as an upfront payment. Generally, a deposit of 20% of the property's value is recommended to avoid paying lender's mortgage insurance (LMI), although a lender may lend up to 95% of the property’s value, which would mean the borrower would only have to have a 5% deposit.

Lender's Mortgage Insurance (LMI)

If you have a deposit of less than 20% of the property's value, you may need to pay LMI. LMI is a type of insurance that protects the lender if you default on the loan. The cost of LMI is typically added to your loan amount.

Additional Costs

When taking out a home loan, you should also consider additional costs such as application fees, valuation fees, legal fees, and ongoing fees charged by the lender. These costs can vary depending on the lender and loan product.

It’s important to note that home loan products and features can vary among lenders, so it’s advisable to research and compare different options to find the most suitable loan for your needs. Additionally, seeking advice from a mortgage broker or financial professional can provide valuable guidance tailored to your specific circumstances.

Disclaimer:
Please keep in mind that the information provided here is a general overview, and it’s always recommended to consult with a mortgage professional for specific details and advice regarding home loans in Australia.

Purchasing your First Home

Buying your first home is a significant step, and it’s perfectly natural to feel a mix of excitement and apprehension. But fear not, because you’re not alone in this journey, and there are numerous assistance programs tailored specifically for first home buyers like yourself.
Let’s delve into some of these programs:

First Home Owner Grant (FHOG) New Homes for First Home Buyers

Are you a first home buyer? You could be eligible for a $10,000 First Home Owner Grant (FHOG) when you buy or build your first new home in Australia. Here’s what you need to know:

What Types of Homes Qualify?

Your first new home can be:

  • A house
  • A townhouse
  • An apartment
  • A unit

These must be newly built, purchased off the plan, or substantially renovated. The grant is not available for established homes.

Spending Limits

Newly Built Homes: The purchase price must not exceed $600,000.

Vacant Land and Building Contract: If you buy vacant land and sign a building contract, the combined cost of the land, building contract, and any variations must not exceed $750,000.

Substantially Renovated Homes: If you buy a substantially renovated home, the purchase price must not exceed $600,000.

Eligibility Criteria for Substantially Renovated Homes

You may qualify for the grant if:

  • Most of the home was removed or replaced.
  • The seller, builder, or a tenant has not lived in the home before, during, or after renovations.
  • It is the first time the home is sold since the renovations were completed.

Note: A property is not considered a new home if the builder or previous owner lived in it, leased it out, or used it for short-term accommodation.

Additional Benefits

The First Home Owner Grant can be combined with other exemptions or concessions available to eligible homebuyers, enhancing your savings and making your first home purchase more affordable.

For more details and assistance with the application process, contact us today. We’re here to help you take the first step towards owning your new home.

For more information: 

https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/first-home-owner-new-homes-grant#heading1

Regional First Home Buyers Guarantee (RFHBG) Scheme

The Regional First Home Buyers Guarantee (RFHBG) is designed to help eligible home buyers purchase their first home sooner in regional areas of Australia. Part of the Home Guarantee Scheme (HGS), this Australian Government initiative is administered by Housing Australia.

How the RFHBG Works

The RFHBG supports eligible regional home buyers by guaranteeing part of their home loan from a Participating Lender. This allows buyers to purchase a home with as little as a 5% deposit without the need for Lenders Mortgage Insurance. The guarantee covers up to 15% of the property’s value (as assessed by the Participating Lender), but it is not a cash payment or deposit.

From 1 July 2023 to 30 June 2024, there are 10,000 RFHBG places available.

Eligibility Criteria

To qualify for the RFHBG, applicants must meet the following requirements:

Applicant Status:

Apply as an individual or joint applicants.

Citizenship/Residency:

Be an Australian citizen or permanent resident* at the time of loan application.

Age:

Be at least 18 years old.

Income

Earn up to $125,000 for individuals or $200,000 for joint applicants, as evidenced by the Australian Taxation Office Notice of Assessment.

Occupancy

Intend to live in the purchased property as owner-occupiers.

Property Ownership History

Have not previously owned or had an interest in real property in Australia (including land) in the last ten years before the loan execution date.

*Note: New Zealand citizens are classified as permanent residents by the Department of Home Affairs for citizenship applications. Verify your eligibility with a VEVO check through a Participating Lender.

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The First Home Buyer Guarantee (FHBG)

The First Home Buyer Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative aimed at helping eligible home buyers purchase a home sooner. Administered by Housing Australia, the FHBG provides significant support by guaranteeing part of an eligible home buyer’s home loan, allowing them to buy a home with as little as a 5% deposit without paying Lenders Mortgage Insurance.

How Does the FHBG Work?

Under the FHBG, Housing Australia guarantees up to 15% of the property value (as assessed by a Participating Lender). This guarantee is not a cash payment or a deposit; it simply reduces the required deposit amount and eliminates the need for Lenders Mortgage Insurance.

Availability

For the period from 1 July 2023 to 30 June 2024, there are 35,000 FHBG places available.

Eligibility Criteria:

To qualify for the FHBG, home buyers must meet the following criteria:

Applicants

Individuals or joint applicants.

Citizenship/Residency

Australian citizens or permanent residents* at the time of loan entry.

Age

At least 18 years old.

Income

Earning up to $125,000 for individuals or $200,000 for joint applicants, as verified by the Australian Taxation Office Notice of Assessment.

Intended Use

Must be owner-occupiers of the purchased property.

Property Ownership

First home buyers or those who have not owned or had an interest in real property in Australia (including land) in the past ten years.

*Note: For citizenship applications, New Zealand citizens are classified as permanent residents by the Department of Home Affairs. This classification does not extend beyond this process. Verify your eligibility via a VEVO check with a Participating Lender.

Deposit Requirements

Home buyers need to save between 5% and 20% of the property’s value as a deposit. While the minimum required for the FHBG is 5%, individual financial circumstances may require a higher deposit as determined by Participating Lenders.

Participating Lenders will assess if the deposit qualifies as genuine savings. Additionally, confirm whether any cash grants from other Australian Government, State, or Territory programs can be included as part of the genuine savings.

Additional Costs

Eligible home buyers are responsible for all associated costs and repayments, including but not limited to:

  • Stamp duty
  • Application fees
  • Legal costs

Property Types and Price Caps

Under the HGS, eligible properties include:

  • Existing houses, townhouses, or apartments
  • House and land packages
  • Land with a separate contract to build a home
  • Off-the-plan apartments or townhouses

For personalised advice and to discuss your specific situation, contact us today. We can provide detailed information and help you navigate the application process for the First Home Buyers Guarantee.

For current up to date information click on the link below as details contained on our site may not be current at time of viewing.

For more information:  https://www.housingaustralia.gov.au/support-buy-home/first-home-guarantee

First Home Buyers Assistance scheme (FHBAS) in NSW

As a first home buyer in New South Wales (NSW), you may be eligible for a full exemption or a reduced rate of transfer duty under the First Home Buyers Assistance Scheme (FHBAS). 

Here’s how you can benefit:

Transfer Duty Exemptions and Concessions 

New or Existing Homes: 

    • Full Exemption: For homes valued up to $800,000.
    • Concessional Rate: For homes valued over $800,000 and less than $1,000,000.

Vacant Land:

    • Full Exemption: For land valued up to $350,000.
    • Concessional Rate: For land valued over $350,000 and less than $450,000
Eligibility Criteria

To qualify for the First Home Buyers Assistance Scheme, you must meet the following requirements:

Property Type

The purchase must be for a new or existing home, or vacant land in NSW.

Property Value

The property value must fall within the specified thresholds.

Transfer Details

The transfer must be for the entire property.

Applicant Type

Must be an individual (not a company or trust).

Age

Must be over 18.

Ownership History

You and your spouse or partner must never have owned or co-owned residential property in Australia.

Previous Benefits

You and your spouse or partner must never have previously received an exemption or concession under this scheme.

Residency

At least one of the first home buyers must be an Australian citizen or permanent resident.

Occupancy

For new or existing homes, you must meet the residency requirements, meaning you intend to live in the property.

Property Value and Transfer Duty Rates

New and Existing Homes:

  • Up to $800,000: Full exemption from transfer duty.
  • $800,000 to Less Than $1 Million: Concessional transfer duty rate.

Vacant Land:

  • Up to $350,000: Full exemption from transfer duty.
  • $350,000 to Less Than $450,000: Concessional transfer duty rate.

Contact us to learn more about how you can benefit from the First Home Buyers Assistance Scheme and to receive personalised advice for your situation. We’re here to help you take the first step towards owning your new home.
For current up to date information click on the link below as details contained on our site may not be current at time of viewing.
https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme#heading1 

State and Territory Grants and Programs:

Beyond the national schemes mentioned, each state and territory offers its own suite of grants, concessions, and programs to assist first home buyers. These can include additional grants, low-interest loans, and support for specific demographics, such as regional buyers or those purchasing off-the-plan properties.

In New South Wales (NSW), for example, first home buyers have access to several grants and programs.

Guarantor Loans

Guarantor loans have become increasingly popular as a means of obtaining a loan with a minimal or even deposit without the added cost of lenders mortgage insurance. A guarantor loan involves having a family member provide a limited guarantee against a property they own.
However, it is important to note that being a guarantor for someone else’s loan is a significant responsibility. Guarantors must have a good credit history, stable income, and sufficient assets to cover the loan if the borrower is unable to make payments. If the borrower defaults on the loan, the guarantor will be responsible for making payments. The lender will generally release the guarantor once the borrower has achieved sufficient equity.


Disclaimer
Please keep in mind that the information provided here is a general overview, and it’s always recommended to consult with a mortgage professional for specific details and advice regarding Guarantor home loans in Australia.

Upgrading or Downsizing

Whether you’re looking to upgrade to a larger home or downsize to a smaller one, making the decision to move can be an exciting but complex process. If you decide to buy your new home before selling your current property, it’s important to consider the financial implications. However, there are options available to help you secure your new home while still managing the mortgage on your current property.

Bridging loans, for example, can provide short-term financing to bridge the gap between buying a new home and selling your current one. This can be particularly useful if you need to move quickly and cannot afford to wait until your current property sells.

 

Whatever your situation, it’s important to speak with a Mortgage Broker to understand your options and ensure you make the best borrowing decision for you. With careful planning and the right guidance, upgrading or downsizing your home can be a smooth and exciting transition to your next chapter in life.

Disclaimer

Please keep in mind that the information provided here is a general overview, and it’s always recommended to consult with a mortgage professional for specific details and advice regarding home loans in Australia.

Review your Current Loan

As a rule of thumb, it’s a good idea to give your home loan a health check at least once a year to ensure that you’re not paying more than you need to and that your loan is still meeting your needs.

The first step in reviewing your home loan is to take a closer look at your current interest rate and compare it to what’s currently available in the market. With interest rates constantly fluctuating, it’s possible that you could be missing out on significant savings by sticking with your current loan.

You should also consider any changes in your financial circumstances since you took out your loan. If you’ve had a change in income, for example, you may be in a position to make extra repayments and pay off your loan sooner, or you may need to adjust your repayment schedule to better suit your current financial situation.

By taking the time to review your loan and compare it to what’s available in the market, you could potentially save yourself thousands of dollars over the life of your loan.

Disclaimer: Please keep in mind that the information provided here is a general overview, and it’s always recommended to consult with a mortgage professional for specific details and advice regarding reviewing your current home loan in Australia.

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