First Home Buyers

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Why finance your first home with Bell Partners Finance?

We are committed to providing our clients with the best loan options, excellent customer service and industry expertise. Our team of experts will guide you through the process, answer any questions you may have and help find the best home loan option for you.

Access to available first home buyer benefits

Purchase property sooner

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Bell Finance Partners Guide for First Home Buyers

Owning a home remains the great Australian dream and the experts at Bell Partners Finance are highly experienced in assisting people wanting to get into the property market for the first time.

Our team of brokers can guide first-time buyers through the home ownership process including all the information on obtaining a home loan and the range of assistance schemes offered by state and federal governments to enable people to achieve their property dreams.

Assistance for first-time homebuyers

First Home Buyer Choice

In NSW, first-home buyers can choose between an annual property fee or an upfront stamp duty payment.

The First Home Buyer Choice scheme lets those buying their first property opt out of paying stamp duty upfront in exchange for a smaller annual tax. The scheme aims at reducing the cost of entering the property market by removing stamp duty – which can be a massive extra expense on top of the cost of a house. First-home buyers can elect to pay an annual property tax of $400 plus 0.3% of the land’s value instead of a lump sum stamp duty payment.

For example, someone buying a first home for $830,000 with a land value of $265,000 can choose between upfront stamp duty of $32,440 or an initial annual property tax of $1,195. The land is not locked into the property tax forever. If the property is sold, it is not locked into the property tax for subsequent owners.

To be eligible for the scheme, you have to be a first-time buyer, aged 18 or over and an Australian citizen or permanent resident. The home has to be purchased for $1.5 million or less and you have to move into the property within the first year and live in it for at least six months.

Remember, stamp duty is a state-based tax, and each state offers its own concessions to first-home buyers. You should check the current grants and exemptions in your state to see what benefits are currently available and the eligibility criteria.

First Home Guarantee

The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), a federal government initiative to support eligible first-home buyers purchasing a home sooner. It is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the federal government.

Under the FHBG, part of an eligible first home buyer’s home loan from a participating lender is guaranteed by NHFIC. This enables an eligible home buyer to purchase a home with as little as a 5% deposit without paying Lenders’ Mortgage Insurance.

Any guarantee of a home loan is for up to a maximum amount of 15% of the value of the property (as assessed by the participating lender). This guarantee is not a cash payment or a deposit for a home loan.

First Home Buyers’ Grant

The First Home Buyers’ Grant was launched back in July 2000, just before the Sydney Olympics. It was designed to offset the introduction of the GST.

Across Australia, the First Home Buyers’ Grant provides a one-off lump sum payment. The grant is funded separately by each of the states and territories. How much you may receive and the conditions for eligibility will vary around the country. It is generally only available if you buy or build a new home. In some states and territories, you may also be eligible if you purchase a substantially renovated home. In NSW, the grant is worth $10,000.

First Home Super Saver Scheme

First-home buyers may also be eligible for the FHSSS, which allows you to make voluntary (before tax) contributions to your super fund that you can withdraw to use as a home deposit. At present, you can make contributions of up to $15,000 per financial year, subject to your normal super contribution caps.

Obtaining a home loan for a first-time buyer

The timeline for obtaining a home loan as a first home buyer can vary depending on the type of loan and the lender. However, on average it can take anywhere from 15 to 30 business days. The process typically involves a credit check, a valuation of the property, and a credit assessment process to determine your eligibility and the terms of the new loan.

As with anyone looking to purchase a property, we highly encourage first-home buyers to get finance pre-approval before looking to purchase. This allows first-home buyers to know their budget and maximum purchase price before finding a property.

First home buyer’s home loans

Some lenders offer first-home buyers home loans that are specifically designed for individuals and families who are looking to purchase their first home in Australia. These loans generally have more favourable terms and lower interest rates compared to traditional home loans. They are intended to make the home buying process more accessible for first-time buyers by providing more favourable terms and more flexible lending options.

What other types of home loans are available?

Fixed-rate loans:

These loans have an interest rate that remains the same for a set period, usually 1 to 5 years. This allows for certainly around monthly payments for the fixed term. At the expiry of the initial fixed-rate term, borrowers can choose to either re-fix their interest rate at the current fixed interest rate at that time or roll it onto the current variable rate offered.

Variable rate loans:

These loans have an interest rate that can change over time. This can lead to lower initial interest rates compared to a fixed-rate loan, but it can also lead to unpredictable monthly payments. A loan can also be split with both a fixed rate and a variable rate.

Home loan repayment types

Principal and interest home loans:

A home loan with principal and interest (or P&I) repayments is one where you pay back the money you borrowed from the lender – also referred to as the ‘principal’ of the loan – at the same time as you pay off the interest your lender charges you. This means the amount you repay each week, fortnight or month is likely to remain fairly stable throughout your loan, unless your lender changes your interest rate or ongoing fees.

Interest-only home loans:

Interest-only (IO) home loans are loans in which only the interest portion is paid off, not the principal, for the first one to five years of a loan, before the loan reverts to P&I repayments. As a result, your repayments may be cheaper initially but are likely to go up substantially once you start paying off the principal component. In Australia, this type of loan is generally more suited to property investors than people buying a home to live in, although it may also be attractive to people who want cheaper initial repayments on their first home.

Why Choose Bell Partners Finance?

At Bell Partners Finance, we are committed to providing our clients with the best loan options, excellent customer service and industry expertise. We have a team of experts that are familiar with the various government schemes and regulations across Australia. Our team of mortgage brokers will guide you through the process, answer any questions you may have and help you to find the best home loan option for you.

Choosing Bell Partners Finance means choosing a team of experts who are dedicated to finding the best loan options for you, making the home-buying process as stress-free as possible, and providing excellent customer service across Australia. Contact us today to learn more about how we can help you navigate purchasing your first home.

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What assistance schemes are available for first-time homebuyers in NSW?

First-time homebuyers in NSW can opt for the First Home Buyer Choice scheme which allows them to forgo upfront stamp duty payment in exchange for an annual property tax. They can also benefit from the First Home Guarantee scheme, which guarantees part of their home loan and helps them to purchase a property with as little as a 5% deposit. Additionally, they may be eligible for the First Home Buyers’ Grant and the First Home Super Saver Scheme.

What is the eligibility criteria for the First Home Buyer Choice scheme?

To be eligible for the First Home Buyer Choice scheme, you must be a first-time buyer, aged 18 or over, and an Australian citizen or permanent resident. The home purchased must be for $1.5 million or less, and you must move into the property within the first year and live in it for at least six months.

What is the timeline for obtaining a home loan as a first home buyer?

The timeline for obtaining a home loan as a first home buyer can vary depending on the type of loan and the lender. However, on average, it can take anywhere from 15 to 30 business days. The process typically involves a credit check, a valuation of the property, and a credit assessment process to determine your eligibility and the terms of the new loan.

What types of home loans are available besides first home buyer's home loans?

Besides first home buyer’s home loans, there are fixed-rate loans and variable rate loans. Fixed-rate loans have an interest rate that remains the same for a set period, while variable rate loans have an interest rate that can change over time. Loans can also be split with both a fixed rate and a variable rate.

What is the difference between principal and interest home loans and interest-only home loans?

Principal and interest home loans require borrowers to pay back the money they borrowed from the lender as well as the interest charged. This means the amount paid each week, fortnight, or month is likely to remain fairly stable throughout the loan term. Interest-only home loans only require borrowers to pay off the interest portion of the loan for the first one to five years before reverting to principal and interest repayments. These loans may have cheaper initial repayments, but the repayments are likely to increase once the principal component starts being paid off.

How long does it get take to get approved for a home loan?

This depends on the lender and your circumstances. Some lenders will be able to approve a straightforward application in a matter of days, where other lenders, or for more complex applications, this can take weeks.

How much deposit is needed for a home loan?

Generally, the minimum deposit will be 5% of the purchase price, however there are more options and better rates if you have a 20% deposit. If you have equity in another property, you may be able to use that to reduce the required cash deposit.

How is the maximum amount I can borrow calculated?

All lenders have their own calculators and formulas for determining the most you can borrow with them. These calculations consider your income, other liabilities, and other household expenses. Your maximum loan amount can vary greatly between lenders.

What is the difference between a fixed rate and variable rate home loan?

With a fixed rate home loan, the interest rate payable is locked in for a period, generally one to five years. A fixed rate provides certainty of repayment and can protect against rising interest rates. A variable rate home loan can increase or decrease during the term of your loan. With a variable rate loan, you will benefit from lower repayments when interest rates fall.

What documents are needed to apply for a home loan?

The most common types of documents you will need to provide include identification; income documents such as pay slips, financials, and tax returns; and statements for existing loans and bank accounts. These are the basic documents, and there will be other documents you will need based on your individual situation.

Should I get a home loan pre-approval?

You should get a home loan pre-approval if you’re looking to purchase within the next three months. A pre-approval helps identify any potential issues, confirms your maximum budget, and saves time getting your full approval once you find a property.

How long does a home loan pre-approval last for?

Home loan pre-approvals generally last for 90 days. You may be required to provide up to date documentation once you locate a property and go for full approval.

Can my home loan get declined if I already have a pre-approval?

Yes. A pre-approval comes with conditions that must be met to reach formal approval of your loan. If these conditions are not met, or your circumstance change, your loan may not be formally approved. Pre-approvals may also not be honoured if the lenders policies change.

What costs are associated with a home loan?

The most common costs associated with a home loan are lender fees, which include application and establishment fees, valuation fees, and lender legal costs. There are also government fees for the registration of your mortgage, and finally lenders mortgage insurance, or LMI. LMI might be payable where you are borrowing more than 80% of the property value. You will also need to allow room in your budget for property purchase costs, such as stamp duty and conveyancing costs.

How does my income and employment history affect my ability to get a home loan?

Your income will determine how much you can borrow, and your employment history will impact how a lender views the risk of lending to you. A higher income and a more stable employment history will give you more options.

Are there any first home buyer programs or incentives available?

There are currently several programs and incentives available, which vary depending on where you live and what you are purchasing. As these do change regularly, it is important to check at the time of application which incentives are available and if you qualify.

What factors determine the interest rate I will be offered on a home loan?

The key factors which will determine your interest rate are the loan amount, your loan to value ratio, your income verification method if self-employed, if the property is to live in or rent out, if you elect for principal and interest or interest only repayments, and your credit score and history.

What is mortgage insurance and when is it required?

Mortgage insurance covers the risk if you were unable to meet your repayments and the lender was forced to sell your property, that the sale price of the property less costs would not cover the amount you owe. This insurance covers the difference between what you owed, less the proceeds from the sale. It’s worth noting that while this insurance premium is paid by the borrower, it protects only the lender. The mortgage insurer will still pursue you to recover any shortfall they had to pay to the lender.

Can I pay off my loan early without any penalties?

Government regulations prevent lenders from charging penalties for paying off your loan early. However, you should be aware that they are allowed to charge a fee for preparing the discharge of your loan in line with the costs incurred by the lender in doing so. For most lenders and loan types, this is under $500. The exception to this is for loans discharged during a fixed rate term, where the bank will incur a loss of income based on the early repayment of your loan. This will depend on the prevailing interest rates and cost of funds at the time and can be between nothing and tens of thousands of dollars. It is important to get an indicative break cost for your fixed rate loan at that time.