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First Buyer Home Loan In Melbourne

Break Free Home Loans are a leading Melbourne mortgage broker, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs. We work closely with clients as trusted advisors and are accessible to clients when needed.

Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges. Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Whether you’re self-employed and have trouble proving your income or you’re a contractor or casual worker, we offer solutions for all types of clients’ income sources.

Are you a first time home buyer looking for affordable finance? Government, online and community lenders can be a great option to help you finance your first time buyer mortgage. If you’re looking for a first home buyer scheme to buy a property, build on vacant land or refinance a property, our experienced brokers can help you find a loan that suits you. Apply for a first buyer’s home loan with our brokers today to ensure a seamless loan approval.

What Are Home Loans For First Time Buyers

Home loans for first time buyers can be obtained through the government, banks, credit unions, online lenders and private lending options. It’s common for first home buyers with less than 20% low deposit to pay lenders mortgage insurance. With a first home loan deposit scheme, however, eligible borrowers can purchase a home with as little as a 5% deposit. This is done in accordance with lenders criteria. The arrangement is made possible because the NHFIC guarantees participating lenders up to 15% of the purchased property value that is financed by the loan.

Who Can Use First Buyers Home Loan Scheme In Melbourne?

Borrowers eligible for first buyer home loan can obtain the scheme through participating lenders. They can use this guarantee in combination with other government programs such as the First Home Super Saver Scheme, Home Builder grant and other Aussie state or territory first home owner grants and stamp duty concessions. In general, borrowers eligible for first time home buyer loan are:

Citizens

You must be an Australian citizen over 18 years old. Permanent residents are not eligible.

Income Earners

Single applicants need to have an annual taxable income of up to $125,000 AUD for the previous financial years. Couples may have a joint taxable income of up to $200,000 AUD per year.

Couples

Couples are only eligible for the first home buyer loan scheme if they’re married or in a de-facto relationship. Other persons buying together such as siblings, parent and child, or friends are not eligible.

To Be Owner-Occupiers

Borrowers must intend to become owner-occupiers of the property they’re purchasing. Investment properties are not supported.

First Home Buyers

Borrowers must be first home buyers who have not previously owned or expressed interest in a property in Australia. This includes doing so on separate and joint occasions with someone else such as in residential strata or company titles.

Terms

The scheme assists borrowers who have at least 5% of the property value saved as a deposit. It will not support borrowers who have more than 20% of the property value saved up as a deposit. Loans under the scheme need scheduled repayments of the principal and interest for the full period of the loan. There may be limited exceptions for interest-only loans in areas of construction lending.

Property Types

First home loans are only eligible for owner-occupied residential properties, not investment properties. They must also fall within the participating lender’s criteria. A first time buyer mortgage can be used for either the purchase or construction of a modest home. The value of the residential property must not exceed the relevant price cap of the local area where it’s located.

How To Apply First Time Home Buyer Loan?

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Check Your Eligibility

If you’re interested in a first home buyer home loan, our brokers can connect you with a participating lender. We’ll help you check your eligibility, compare different loan products from various lenders and find a loan that fits into your budget.
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Submit Your Application

So you’ve found the best option with suitable monthly payments, fees and repayment terms, what now? Our brokers can help you submit your loan application. We’ll thoroughly address all eligibility criteria to create a strong case for your loan approval.
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Buy Your Home

Once the lender approves your home loan first time buyer finance, you must purchase your new home within 90 days.

What Documents You Have To Submit

When you’re ready to apply for a home loan in Melbourne, there are a few things you’ll need to have in order:

first buyers home loan
  • Proof of income: Lenders will want to see proof that you have a steady income in order to make sure you can make your loan payments.
  • Employment history: Lenders will want to see proof that you have a steady job and income. They may also want to see your employment history to determine how long you’ve been employed and if you’re likely to keep your job.
  • Other debts and credit history: Lenders will want to know about any other debts you have, such as credit cards, student loans, or car loans. This information helps them determine how much debt you can handle and whether you’re likely to default on your loan.
  • Asset statements: Lenders will also want to know about any other assets you have, such as savings accounts, stocks, or bonds.
  • Tax return notice of assessment: You need to process your tax return. When the Australian Taxation Office sends you a statement called a Notice of Assessment, you need to submit this document. Participating lenders will review your Notice of Assessment for the relevant financial year to issue a scheme place pre-approval.

    About First Home Buyer Loan

    At Break Free Cheapest Home Loans, we’ve helped clients find some of the best first home buyer loans in Melbourne. Some considerations we encourage you to go over to ensure you pass your eligibility checks smoothly include:

    Having a good credit score: Your credit score is one of the most important factors in determining whether you qualify for a home loan. Lenders will look at your credit history to see if you have a history of making on-time payments and managing your debt consolidation loans. If you have a good credit score, you’re more likely to qualify for a home loan.

    Earning a steady income: Finance lenders require that you have a source of income to make your loan payments. Lenders will typically look at your employment history and current income to determine whether you can afford to make your loan payments.

    Clear asset information: Lenders require that you have some assets, such as a down payment, to qualify for the loan. They will look at your savings and investment accounts to determine whether you have the assets to qualify for a home loan.

    Once you’ve done the above it’s much easier to apply for the best home loans for first home buyers and get the interest rates and repayment terms you want.
    first buyers home loan melbourne

    How To Get No Deposit Loan For First Home Buyer?

    It is in fact possible to get a no deposit loan for first time home buyers. However, you will need a guarantor. A guarantor can be anyone from a parent, sibling, or a close relative who will take responsibility for the loan if you fail to meet your payment obligations. You need to be confident that you can afford your loan so as to not strain your relationship with the guarantor.

    Additionally, most borrowers who get no deposit loans are first home buyers who plan to live in the homes they purchase. Most lenders prefer these types of buyers as they are at lower risk and are more likely to pay their loans on time. To get a no deposit first home buyer loan approved, you will need the support of a creditworthy guarantor.

    How To Get Home Loan First Time Buyer With Bad Credit?

    Some applicants may have less than ideal credit. While this can prevent them from getting a loan from traditional lenders, they will still qualify with non-bank and online lenders. Some specialised lenders offer loan products specifically for bad credit applicants. However, since this is considered risk-based financing, borrowers will be charged with personalised interest rates according to their credit score. As such, bad credit applicants will need to pay higher interest rates and have less flexible loan terms compared to applicants with good credit. If you’re applying for a bad credit home loan, it’s important to weigh the pros and cons carefully before making a decision.

    Alternatively, you can also wait before applying for a loan and spend some time improving your credit score to get better terms and rates. These are some tips to secure the best rates on your home loan:

    • Improve your credit score: Lenders will use your credit score to determine whether or not you’re a good candidate for a loan. If you have a good credit score, you’re more likely to get approved for a loan with a lower interest rate.
    • Sign a loan with a cosigner or guarantor: If you don’t have a good credit score or a large down payment, you may need to get a cosigner for your loan. A cosigner is someone who agrees to be responsible for your loan if you can’t make your payments.
    • Put down a larger deposit: A larger deposit will help assure lenders of your ability to repay the loan.
    • Use collateral as loan security: Putting down an asset to borrow against the loan will minimize risk to lenders. They will be more likely to offer lenient loan repayment terms and interest rates. Although, remember that if you default on your loan, the lender has the right to sell your asset.
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    Choosing The Best First Home Buyer Loans

    When you want to up your borrowing power and get the best home loan for first home buyer, pay close attention to the following factors that make up your costs:
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    Actual Rates

    The rates of your home loan will determine its affordability. It’s important to calculate the true cost of your home loan by taking into account your comparison rates per annum, and the overall fee structure of the loan.
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    Deposit Amount

    In most cases, 20% of the property value you’re buying is preferred as a home loan deposit. 10% is the minimum amount required. This depends on the lender, but the general principle is it’s better to have a larger deposit saved before buying a home. This is because the bigger your deposit, the less you need to borrow and the less interest you need to pay. Lenders also often reserve the most competitive rates for borrowers with a high deposit or low loan-to-value ratio (LVR).

    However, with the first home loan deposit scheme, you need to have saved at least 5% of the eligible property’s value as a deposit and less than 20%. If you exceed this limit, the loan will not be covered by the scheme.

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    LMI

    When you’re borrowing more than 80% of the property’s value, you will usually need to pay a hefty premium called lenders mortgage insurance (LMI). This is either paid upfront or added to your mortgage to be repaid over time. The LMI exists as a means for the lender to protect themselves against the risk of default. Luckily, if you’re a first home buyer, you may be discounted or waived entirely from this requirement. You should compare and ask prospective lenders if they have this option available.

    Fees

    A home loan will usually incur fees be it upfront or monthly fees. These can be your establishment fees, ongoing account administration fees, penalty fees and other charges associated with the cost of borrowing or accessing certain loan features like redraft facilities.
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    How Much Can You Borrow?

    Lenders consider your borrowing power when you apply for a home loan. This is determined by factors such as your income and expenses, how much you have saved as a deposit and any debts you have.

    Have Any Questions?

    Got any questions? Our brokers can help you learn more about your finance options. We work closely with you to understand your unique financial situation and find a loan that works for you. If you’re a first time home buyer searching for a suitable home and the best way to finance your purchase, our brokers can help. We can compare different loan products from different lenders to find the right loan for you. We can negotiate the best short terms loan, check your eligibility and complete a loan application on your behalf. Apply for your loan with us today.

    Frequently Asked Questions

    The following are some of our most frequently asked questions:

    How To Apply First Time Buyer Mortgage?

    Lenders need to see key documents to prove your identity and verify your financial security. They need to consider if you have the ability to repay their loan. By understanding your financial situation they can decide whether or not they want to give you finance and how much money they’re willing to lend.

    You will need to provide payslips, bank statements and asset information to verify your income and savings. Lenders will review any liabilities and debts you have including HECS and HELP balances, and credit cards and buy now, and pay later debts. You should provide your complete and honest financial information so they can get a clear picture of your budget and determine a suitable loan amount you can afford.

    What Is The Best Home Loan For First Home Buyers?

    This depends on the lender and your specific financial situation. Generally speaking, you need to find a loan with competitive interest rates and flexible repayment terms so you won’t struggle with your payments over the life of your loan. You are also better off with principal and interest loans to avoid paying more in interest over the life of the loan. Once you’ve found a suitable loan and bypassed the eligibility requirements, you can budget for your loan obligations and pay it off over time while receiving immediate finance.

    How Does The First Home Loan Deposit Scheme Work?

    The first home loan deposit scheme works to support borrowers in the purchase or construction of a modest home. The value of the residential property should not exceed the relevant price cap of its local area. Eligible residential properties include:

    • Existing houses, townhouses or apartments
    • A house and land package
    • Land and a separate contract to build a home
    • An off-the-plan apartment or townhouse

    Eligible first home buyers can apply for a loan to purchase an eligible property through a participating lender. Eligible applicants can use the scheme in combination with other government incentives such as the first home super saver, home builder grant or other state and territory first home owner grants and stamp duty concessions.

    Loans within the scheme must follow scheduled repayments of the principal and interest of the loan for the full period of the loan agreement. There may be limited exceptions on interest-only loans for construction lending.

    Contact our team

    We love to hear from each and every one of you. Please feel free to reach out to us today!