If you’re looking for a first home buyer home loan, you’ve probably discovered that there are a lot of different kinds of home loans. So let’s take a look at some of the most common loans available — and which of them may be right for you.
Fixed and variable loans
One of the most important considerations when you’re taking out a loan is whether you want to opt for a fixed or variable rate loan. This refers to the interest rate that you’ll be paying on the principal of the loan; a lower rate can save you thousands of dollars over the lifespan of your loan and allow you to pay it back far sooner.
Fixed rates are determined at the beginning of the life of the loan, and tend to remain constant throughout — unless you refinance your loan. It also means that you have a buffer if the RBA increases the official cash rate. Conversely, it means that you don’t see reduced monthly payments if the RBA reduces rates, the way it would with a variable rate loan, which rises and falls in accordance with the market.
Many borrowers opt for a blend of both, with a fixed period at the beginning of the loan, which switches to variable after a number of years. Both have their advantages and disadvantages, so it’s important to speak to a professional for advice before deciding one way or another.
Low doc loans
Low doc loans are generally used by people who are self-employed or have seasonal income, as opposed to the more conventional 9 to 5 employment. Rather than being solely reliant on bank statements or payslips — which may not be reflective of their true financial situation — low doc loans also allow you to use documentation such as letters from your accountant, Business Activity Statements (BAS) and other items. This means that borrowers aren’t needlessly disadvantaged when it comes to securing a first home buyer home loan.
Construction loans
Building your own first home? You’ll need a construction loan. Repayments are usually required in stages as construction on the property progresses, and the house nears completion.
Non-conforming loans
Had previous credit issues? Non-conforming loans can be an excellent solution for your needs, as well as suiting a wide variety of other circumstances. Though they tend to require higher interest repayments, they can be a great way to rebuild your credit history and allow you to get a foot on the property ladder in the process.
Which loan is best for me?
These are some of the most common types of home loans, but it’s important to note that there are others too. Some are more suitable for people who own property already, such as bridging loans or reverse mortgages. Others, such as interest-only loans, can be great if you’re still establishing yourself financially but have run across the opportunity to secure a first home. So if you don’t see one that matches your specific needs here, that’s no problem — just get in touch with the home loan experts at Mint Equity today!
Find out which first home buyer loan is right for you with Mint Equity
Here at Mint Equity, we offer a range of different kinds of home loans for first home buyers. So why not get in touch with our expert team to discover more about how to choose a home loan today? We’ll be more than happy to help!