Purchasing a home is a huge investment and when it is your first it is a significant event. It can also be quite challenging. This is because it requires several steps and you may be worried about making a costly mistake. One of the many things that you need to do is to ensure that you are ready financially. You will need to consider your financial situation and see the type of loans that you are eligible for and any assistance from the government that may be available to you. You also need to get the paperwork in proper order while you find a home and apply for a mortgage.
The good news in all of these is that you are not only buying a new home. As a first-time homebuyer, you can enjoy a range of special advantages that were created to encourage people who are new to the housing market. By doing more research, you can begin to understand all and be better prepared when making decisions towards getting a loan to buy your property. You can read about these benefits here https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer.
There are a variety of home loans available depending on who the borrower is. There is the first home buyer, owner occupier, construction loan, refinancing, etc. with different interest rates which can either be variable, fixed, or split rate.
Usually, home loans are secured against a property. In a situation where the owner is unable to keep making payments, they are required to sell the property in order to settle the debt.
Options for First Time Home Buyers
If you are buying your first home, below are some of the loan options available for you to consider.
First Home Owner Grant
This is an initiative of the Australian Government that was introduced in order to help Australian citizens who are buying their first home. No matter where you are in the country, the grant is available to you. The base amount is $7,000 but the total amount as well as legislation governing the grant varies from state to state. You can learn about this here based on your state or territory.
This is the most common loan in Australia. It is determined by the official rate that is put in place by the Reserve Bank of Australia. The funding costs usually determines the increase or decrease in the rate all through the duration of the loan. You will pay off some of the principal and the interest with regular monthly payments.
You may get a loan that comes with fewer features but at the same time will provide you with discounted interest rates. The beauty of variable interest is that when there is a fall in the interest rate, your repayments will equally fall. You can even make extra payments to shorten the length as well as the cost of your mortgage. On the other hand, if there is a rise in interest rate, the amount you have to pay increases accordingly.
If you select a basic plan, it does not come with redraw features. This means that you will not spend more when you have paid off the loan amount. This plan does not give you the option to make extra payments that will help you pay off the loan quicker.
With a fixed interest loan, the rate is fixed for a certain period. Your repayments are standard and will not change nor fluctuate even when there is a change in the interest rate. When this period elapses, you can choose to continue with a fixed rate or switch to a variable loan. The good thing about these types of loans is that even if rates go up, it does not impact your payment. Consequently, if it goes down, your payment will stay the same. To this end, you may pay more than someone who is on a variable rate.
Furthermore, you may not have the opportunity to make extra payments that can help you pay your loan quicker.
This is a combination of variable and fixed interest loans. You have to decide how much of the loan amount will be variable and how much will be fixed. The advantage to this is that when there is a change in interest rate, it will result in fewer fluctuations in your payments. Also, when the interest rate falls, you can benefit from the variable part and you can as well make an extra payment in this regard.
For this type of loan, there is a limit to the number of extra payments available to you. When the interest rate rises, it does not affect the fixed-rate part of the loan.
Talking To A Home Loan Service
Asides from the loans above there are other options that you can get. You can always talk to loan and financial advisers or services who will guide you on what to do every step of the process. They can help you evaluate your financial situation and give tips such as how much you may be able to borrow and what the repayment will look like.
Mortgage Loan services can provide you with a range of products that will help to make getting a mortgage as well as buying your property easy. They may also offer legal advice and connect you to real estate agents who will be there to assist you in getting your new home. All in all, your research coupled with advice from them should help you to make a good decision.You can check out this link https://www.wealthyyou.com.au/first-time-home-buyer-mortgage/ for more information.
It is exciting when you are purchasing a first home however, it could also come with anxious moments. This is very understandable as it is a huge venture and you do not want to make mistakes. To get help, you can talk to people who handle home loan services. They will be able to guide you on the various options available to you.