Home Loans for First Home Buyers


What should first home buyers look for in a home loan?

What should first home buyers look for in a home loan? First home buyers, historically, have always been up against it. As demand and consequently prices for real estate go up, so too does rent, making it more difficult to save up a decent deposit for your dream home. Add to that banks’ withdrawal of 100% loans where you can borrow the entire purchase price of the property (no deposit home loans) and it’s easy to see why some people find the process of getting into their first home quite challenging.

Recognising the significant difference between first-timers and those more experienced in the complicated ways of home loans, CANSTAR has examined what the banks, credit unions, building societies and mortgage specialists offer this specialised group of people.

We cherry-picked the features of utmost importance to first home buyers and evaluated how lenders matched up in their offerings. We looked at how financial institutions shaped up in all phases of home ownership, as they apply to first timers.

Educating first home buyers about how they should be preparing themselves, setting savings goals and offering savings vehicles that provide incentive towards the end goal of home ownership is paramount.

First home loan features to look for

As the time of purchase nears, the full “to do” list and home loan calculators should be provided by institutions to estimate the full cost of not just the loan, but the whole home-buying experience.

When the time comes to borrow, the lender has to guide the first home buyer through the maze that is buying a home. We believe there has to be a friendly face who will give advice and make the steps straightforward. For this reason, CANSTAR eligibility criteria specified branch access or mobile lenders, as obtaining a home loan online is often not for novices.

Tips for first home buyers

Buying a property – especially first time around – is a big decision. Here are some pre-purchase tips:

Don’t start looking until you have a location

There are thousands of places to buy out there and the possible choices can become overwhelming. Narrow your search to a specific location before you start looking. Choose either one suburb, or one suburb plus a five kilometre radius. Having a focus will save you precious time.

Suss out the market

Falling “in love” with a property on the very first weekend you start looking can give you a bad case of buyer’s remorse down the track. So once you’ve chosen your location, put yourself in a good negotiating position by getting to know the value of the suburb you?re considering.

Get pre-approval

It’s vital to know what your buying budget is – no point looking at places that cost far more than the bank will lend you. Try our borrowing power calculator, and talk to your financial institution or a mortgage broker about getting a pre-approval in place. Also work out your upfront costs, such as lenders mortgage insurance, stamp duty and moving costs.

Check your credit rating

Knowing what’s on your credit rating can help you to explain any transgressions to your prospective lender. Click here to learn how to check your credit rating.

Shop around for a great value loan

Your home loan may be the biggest debt you ever have so ensure you are not paying more than you need to. Check out current minimum, maximum and average home loan rates on CANSTAR’s database here.

Finally, once you have found the home of your dreams, make sure that any documentation you sign is conditional on at least a property and pest inspection as well as finance.