THE FIRST HOME BUYER MORTGAGE

When applying for a first home buyer mortgage you will need to provide information to the mortgage broker about your personal financial circumstances.  From the information you provide the broker will be able to work out how much you can borrow and what repayments you can afford. If you do not qualify for a mortgage initially don’t despair as the broker can advise you what you must do to qualify in the future.

HOW MUCH DEPOSIT WILL YOU NEED?

Assuming you are eligible for the first home owners grant from the Queensland government you will require less deposit than you think. If you were to borrow $400k then you would only need around a $20,000 deposit.  One of the things that you will need to keep in mind is that the less deposit you have the more that you will need to borrow.  The smaller your deposit is the higher your loan value ratio (LVR) and you may need lenders mortgage insurance the cost of which will need to be taken into account when the lender works out how much you can borrow. Some lenders will also charge you a higher interest rate when you have a high LVR.  An answer may be a family guarantee of your loan which could save you the expense of mortgage insurance.  Our mortgage brokers will still provide first time home buyer mortgages of 97% LVR to FHB that are eligible for the Queensland First Home Owners Grant. However included in your loan is the cost of mortgage insurance.  Check your eligibility for the FHOG 

Fee conditions and lending criteria apply. Interest rates may change without notice. Information is for General Purposes only.

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THE LOAN VALUE RATIO

The loan value ratio (LVR) is calculated by dividing the amount of the loan by the purchase price. Most lenders will lend up to an 80% LVR without requiring you to take out mortgage insurance.  For example if you buy a house and land package worth $400,000 and you have a deposit of $80,000 (including FHB Grant) you will only borrow $360,000. This has an LVR of 80% and you will not need mortgage insurance. In calculating the amount you can borrow you also have to take into account the cost of stamp duty and legal fees. In Queensland you do not have to pay transfer duty on new homes but you may still have to pay a reduced amount on the land. In Queensland if you have never had interest in land anywhere in the world and the purchase price of the land is less than $400,000 you will not have to pay transfer duty. See Qld Gov. Web site for more info.

THE MORTGAGE QUALIFICATION CRITERIA OUTLINED

In order to qualify for a first home buyer mortgage you will need to meet 5 key requirements

1.       You must have a clear credit file

2.       Minimum 12 months renting (lease in same name as sale contract)

3.       First Home Buyer Eligible for the Queensland Great Start Grant

4.        Full time employment 6 months or Casual 12 months

5.        Minimal existing debts

To establish you eligibility for finance the mortgage broker will ask for the full names and current addresses of all the applicants to the loan, and also ask you about

·         your marital status,

·         your previous address

·         your employer details or whether you are self employed

·         Occupation position

·         Date you commenced employment

·         Employers contact details

·         Your salary and income.

·         Questions about your financial assets

·         Questions about your financial liabilities

·         Questions about your living expenses and whether you pay any child maintenance

·         You will also be asked to consent to a credit check

You will need to answer these questions honestly so that if there is a problem the broker can work with you to find a solution so that you qualify for your first home buyer mortgage. 

THE NO DEPOSIT FIRST HOME BUYER MORTGAGE

If you have no deposit you could use a Family Guarantee (also call a Security Guarantee). A Family Guarantee is when the borrower’s parents, uncle, siblings or friend provide additional security for the borrower’s loan. This allows the borrower to reduce their LVR and avoid paying mortgage insurance. The guarantee allows the borrower to borrow 100% of the loan amount plus associated costs.

First Home Buyer Mortgage animated picture demonstrating the no deposit loan when using a family guarantee.

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