What makes a good home loan for first home buyers?

More first home buyers are getting their foot in the door as house prices fall in Australia’s two biggest markets.

The proportion of first home buyers hit a six-year high in June, where they accounted for 18.1% of new owner-occupier loans.

At the same time, lending to property investors is on the decline amid falling house prices in Sydney and Melbourne and tighter lending restrictions.

While it is an exciting time for first home buyers, it is important they put themselves in the best position to secure the right loan for them by doing their homework before jumping in.

Canstar Group Executive of Financial Services Steve Mickenbecker said it was important to avoid the temptation to accept the first home loan offer and instead compare loans from a range of lenders.

“You wouldn’t buy a car without comparing prices from multiple car yards,” Mr Mickenbecker said.

“Choosing a home loan is the same, but far more important because paying too much can cost you thousands of dollars more over the life of the loan.”

He also urged first home buyers to look out for the fees and not just the interest rate and to be careful when it comes to a low introductory rate that rolls over to a high rate after a certain period.

“In addition to finding the right price, you’d want a loan that gives you the flexibility to make extra payments and redraw if necessary, or gives you an offset facility,” he said.

There are several other factors that may influence which loan is best suited to a first home buyer, including the size of the deposit, proof of being able to save and whether they have a home loan guarantor.

2018 First Home Buyer Award

After analysing 1011 loans for first home buyers from 90 lenders, Canstar has announced the winners of the 2018 First Home Buyers Award. This award is presented to financial institutions rated by Canstar that provide the strongest combination of products and services across the first home buyer market in Australia.

A range of institutions, including banks, credit unions and building societies were rated. Both pricing and features of mortgage products weighted towards a first home buyer’s needs were used to assess winners. For more information on how Canstar selects award winners, please read our methodology.

Canstar is pleased to announce the following winners of its 2018 First Home Buyer Award (listed in alphabetical order):

Bank of the Year – First Home Buyers (National):

Customer-Owned Institutions of the Year (State-based):

Beyond Bank (WA)

Heritage Bank (Qld)

Newcastle Permanent (NSW)

People’s Choice Credit Union (SA, VIC & NT)

Bank of the Year – First Home Buyers: ANZ

ANZ First home buyer

Canstar Research found ANZ offers rates as low as 3.99% and a comprehensive range of loans for first home buyers and first home investors.

As a result, ANZ has taken out Canstar’s Bank of the Year Award for First Home Buyers for the third time, having also taken out the title last year and in 2015.

Canstar’s Group Manager of Research Mitch Watson said ANZ offered first home buyers with a number of impressive features and advantages, including obligation-free access to a wide range of useful tools, calculators, free property profile reports, an extensive branch and mobile lender network.

“In addition, ANZ provides additional support to those looking to break into the market, with the ANZ First Home Coach program helping buyers to set up a plan that will help them work towards their deposit,” Mr Watson said.

”This program assists consumers in the planning, finding and buying process, with the first step in the journey assisting potential buyers with the creation of a bespoke savings plan designed around their individual circumstances.”

Customer-Owned Institution of the Year – First Home Buyers: Beyond Bank (WA)

Beyond bank first home buyer

Beyond Bank has received the Customer-Owned Institution Award for WA, thanks to its range of products across residential variable and fixed rates with variable rates from 3.79%, and fixed rates from 3.83%.

Canstar Research acknowledged the strength of its budgeting tools and calculators, information and links to market research to help first home buyers choose where to buy, plus the customer support on offer through its 40 plus branches across NSW, SA and WA.

Customer-Owned Institution of the Year – First Home Buyers: Heritage Bank (Qld)

Customer owned institution Heritage Bank

Heritage Bank has retained the Customer-Owned Institution Award for Queensland for a third year. It offer rates as low as 3.67% on a variable home loan and as low as 3.79% on a fixed rate home loan.

Canstar Research made particular mention of the guidance Heritage Bank provides on what is involved in buying a home and the educational material, guides, articles, tools and calculators it offers customers, as well as its 40 branches in Queensland to support clients.

Customer-Owned Institution of the Year – First Home Buyers: Newcastle Permanent (NSW)

Customer owned institution of the year Newcastle permanent

Australia’s second largest customer-owned banking institution Newcastle Permanent has retained the Customer-Owned Institution of the Year – First Home Buyer for NSW Award for the fourth year running.

Canstar Research said that like other customer-owned institutions, Newcastle Permanent returned profits to customers through lower fees and rates with its Premium Plus Package being a standout for first home buyers.

For consumers with more than a 10% deposit, this package has an advertised variable interest rate of 3.72% For those still saving towards their deposit, their Smart Saver account can return up to 2.50%, potentially helping first home buyers get to their deposit amount quicker.

Customer-Owned Institution of the Year – First Home Buyers: People’s Choice Credit Union (SA, VIC & NT)

Peoples Choice Credit Union

People’s Choice Credit Union has won the Customer-Owned Institution Award for the Northern Territory, South Australia and Victoria.

Canstar Research said the credit union offered variable rates as low as 3.89% and fixed rates as low as 3.84%, and provided a free first home buyers guide, tools and calculators and educational resources.

It also has 45 branches across ACT, NT, SA, and WA, with the majority in SA, giving buyers great accessibility.

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