The bigger your deposit, the less interest you’ll pay over the life of the loan, the shorter the term of your debt and no lender’s mortgage insurance. Generally, you don’t need to insure the mortgage if you have a deposit of 20% of the purchase price. Anything less and you’ll need to guarantee the bank the debt will be paid with insurance costing up to $10,000.
When saving your deposit consider high interest savings accounts and First Home Saver Accounts. These are high interest bearing accounts with government incentives including extra interest and a lower tax rate on interest earned. Talk to your bank about terms and conditions and whether it’s right for you.
Making the purchase – Things to consider
First home buyer grants
Investigate first home buyer grants available in your State. It’s generally $7000 for established homes valued under $750,000. Different bonuses apply for building a new home.
Tax
Stamp duty is the largest tax you’ll pay and varies by State. It’ll either be a flat rate and/or a percentage of the purchase price however, concessions are available for first home buyers and properties under a certain value.
Land tax may also apply but there are tax free thresholds and exemptions for some properties – contact your State Revenue Office for more information.
Low-doc loans
Low documentation home loans require less information for approval than a traditional home loan. However, they’re considered higher risk and so attract higher interest, less flexibility and are subject to loan and rate changes. If your loan changes you should ask your bank about how to get a better deal and refinance to a lower interest rate.
Find the best interest rate
To find the best interest rate you can either shop around and fill in forms on all the different bank websites, or you can use our home loan comparison engine to find the best home loan for you.
Link - http://www.mlforum.com.au/first-home-buyer/first-home-buyers-guide/
