First time buyers often find it the hardest to obtain home loans, mainly due to the fact that there are so many different hoops to jump through these days. Not only are the expectations of banks fairly high, but the wide range of home loans can throw a spanner in the works, too. There are some loans that are available to everyone, while others can be better suited to first time buyers – and here’s a closer look at the types of home loans a mortgage broker can help with that are ideal for new borrowers.
Adjustable rate mortgages, or variable home loans, are one of the most common applied for by first time applicants. They are readily available thanks to banks in Australia and they also boast some of the fairest terms. One of the only off-putting features of this type of loan relates to the fact that the interest rates associated with repayments can be prone to fluctuating.
There are alternative features that can help to minimise the concern of fluctuations however, and further information is provided below.
FRMs, or fixed rate mortgages, are a type of mortgage that offers fixed rates of interest, as opposed to variable alternatives. Although they might seem more appealing – they actually pose two drawbacks that are definitely worth considering. The first is that the fixed rate might result in the borrower losing out on the savings, if the variable rates ever drop down. Secondly, the duration of the fixed rate will likely be temporary – often lasting just a couple of years or less.
This can allow the borrower to keep on top of their repayments however, even for a certain amount of time, to ensure that they get to take advantage of a controlled repayment plan.
These home loans are the most popular by far, with thousands of Australians applying for them each year. They offer some of the fairest terms, but in most cases borrowers will need to provide between 10 and 20% to act as a deposit. There are some instances whereby banks can lower this deposit amount, but they will often require other assets to be used to secure the loan or stricter repayment methods.
This method can be very convenient for first time buyers, especially those that might have the money put aside via savings to cover the cost of the deposit. With fairer terms and flexible repayment options – they can also be a good way to get onto the property ladder and then consider refinancing in the future.