First home buyers.

There is no single ‘best’ loan that suits all buyers. What’s right for you will inevitably come down to your unique situation, such as your income, job type, loan size, deposit funds available, living expenses, and location of the purchase property.

The best mortgage for anyone is typically one that has an excellent interest rate, has no or very low fees, has flexibility and the choice of a 100% offset account, and most importantly, will definitely be approved!  Talking to the experienced mortgage brokers at Multi-Choice is a great option for first-time home buyers, as we can help you compare all the different options, advise on the most suitable loan for you, and then complete the application on your behalf, making the whole process easier and much less stressful.

Your borrowing capacity is determined by your income and your living expenses and refers to the maximum amount of money a lender would be prepared to lend you.

This varies greatly between lenders, which is why many borrowers use a broker who can quickly work out which lender will offer you the largest loan. Our brokers use special software and their many years of experience to quickly find out which lenders will offer you the money you need. They then compare interest rates, application fees, ongoing fees and also the specific loan features to determine which of these lenders has the best deal for you.

A minimum of 5% is the short answer but the real answer could be 0% if you have a family guarantee!  There are many lenders and mortgage products in the market and the products also change over time, so it’s always best to talk to an experienced mortgage broker to find out the minimum deposit that you will personally be required to have.  

Your home loan deposit is one of the biggest factors in determining the kind of loan you may be eligible for and what interest rate you will be offered.  Understandably though, first home buyers generally have very limited savings to use for their first property purchase and so the minimum deposit is what most first-time borrowers want to commit to so that they can at least get started on the property ladder.  

The minimum deposit required for a stand-alone security property may be 5% of the purchase price.  However, it is preferable to have 8% to cover loan costs because your loan options will increase dramatically and that will definitely result in a better deal for you the borrower.  The lenders link the interest rate charged to a borrower to the risk of the loan, and the lending risks decrease with higher deposits which means that the interest rate may be lower. 

Typically, lenders will require Lenders Mortgage Insurance (LMI) on any property loan with a Loan to Value (LVR) ratio above 80%, and that insurance premium is paid for by the borrower.  Therefore, if you have anything less than a 20% deposit, it will normally cost you from ‘a little extra’ to ‘quite a lot’ extra to get a home loan because the higher the LVR the greater the cost of the LMI.

The best scenario of course is if you don’t have any savings whatsoever, but you still get to purchase a property with zero deposit!  If you are fortunate enough to have a family member willing to go guarantor by offering their equity in their own property, the 20% deposit is essentially “paid for” by the family member and zero LMI is therefore required to be paid.  What the lender will do is take security over the other family member’s property to the tune of 20% of the value of the purchase property of the first-time buyer.  In other words, you could say that you ‘piggy-back’ the equity of a family member!  The loan ends up as 100% of the purchase price or it could even be high enough to cover all the other costs too.   

At Multi-Choice, our Mortgage Brokers always start by firstly determining your objective and then will assess all the options to achieve finance success.  Here are a few steps in the process:

1. Your objectives are clearly defined.
2. Then the broker will work out your maximum borrowing potential by asking you a few detailed questions about your income and expenses, your assets and liabilities, and of course how much you have in equity and savings.  
3. Next, any preferences you might have in lenders, loan types, loan features and loan term will be noted. 
4. After that the broker will do a preliminary assessment to determine which lenders would be best suited to your personal circumstances.  The broker will also collect all the required paperwork from you before preparing a Credit Proposal for you that will outline all the details of the loan that they have advised you on and which you have selected. 
5. The broker will then lodge a loan application with the chosen lender and will follow-up with the lender until the loan is approved and settled.  The process is made very easy for the borrower who does not have to deal with the lender at all and at the same time, is assured that they are applying for their best loan with the correct lender to maximise the potential for success.

Make your appointment today to speak to an experienced mortgage broker who will find you a great home loan without stress.

When you sign the contract, a small initial deposit is required to be paid to the agent. However, you don’t have to pay the full deposit at this point, as the contract is still considered conditional.

Once the contract becomes unconditional and you are locked into the purchase, you will need to pay the full contractual deposit balance. You will pay this to the estate agency, who will then pass it on to the vendor, after deducting their sales commission. For a more detailed explanation on your contractual expectations when making an offer, please take a look at the FAQ, “Am I committed 100% if I sign a contract to purchase or can I back out?

Yes, most definitely. A pre-approved home loan is defined as a loan that a lender has approved prior to the borrower having a signed contract on a purchase property.

The pre-approval is free and is valid for up to 6 months, depending on the lender. It’s not an unconditional commitment from the lender but rather an assessment based on your current financial circumstances. However, it can help to highlight things you might need to change now to make sure your future application is accepted, as well as protecting your credit file against a rejection.

Most people start the process of purchasing property with thoughts! They might only have an initial thought about property but if that thought settles in their mind, it starts a roller-coaster of actions that typically will have them finding a dream property for immediate sale, but they will not have prepared their personal finances sufficiently for loan approval!  When they start shopping for the finance, they invariably start bumping into hurdles!

The better way to start the process of acquiring property, is to follow up that thought of acquiring property with a call to an experienced mortgage broker and spend some time discussing the idea with an unemotional third party. That way the maximum loan and maximum purchase price will be determined accurately, and plans can be set for any budget changes required before a loan application is made to a lender. You will definitely find that a good independent mortgage broker is most certainly worth his or her salt! 

Besides the fact that their service is free, their advice on “all things property” goes well beyond the tangible service proposition of helping you sort through the best finance options available. The fact that they have been through the process of acquiring property hundreds of times vicariously through their clients, means that they have a wealth of knowledge to contribute to you in your journey of property acquisition. That knowledge will either save you thousands or save you a few nasty headaches! Good advice will also give you peace of mind and help you sleep better!  This shared knowledge is the true backbone of the value of an experienced mortgage broker and in my opinion, is the reason why most Australians now use the services of a mortgage broker.

Advantages of a pre-approval

• It’s FREE
• It’s valid for up to 6 months, depending on the lender.
• It highlights things that you might need to change “now” in order to get ready for an application that will be approved “later”.  Lenders can get very pedantic on small things in your budget that most borrowers would overlook. If you make an early application for finance, a Multi Choice Mortgage Broker will help you get ready to have your loan approved in time for when you want to purchase. By applying early, you will be saving yourself the headache of a loan declined and the disappointment that goes with it.  
• It gives you a definite maximum purchase price.
• It protects your credit file by creating the best chance of having your loan approved rather than the adverse effect of a loan declined.
• It potentially SAVES YOU BIG DOLLARS by giving you confidence in your house hunting which translates into better price bargaining with the agent.
• It allows you to move quickly when you find that gem of a house which will improve your chances of a successful bid on the home.
• It allows you a certain amount of confidence to bid at auctions.
• Real estate agents have the ability to sway their vendors on which purchaser’s offer to accept and will tell their vendor which offer looks more certain on finance. If you tell the agent that your finance has been pre-approved, it makes your offer more attractive. 
• It shows your estate agent that you are serious about buying the home. Particularly in a sellers’ market, many agents won’t spend their time with purchasers if they are unsure of their ability to secure the finance. 
• The pressure of a 14-day finance clause is greatly reduced if you have been pre-approved.  Because the lender has already seen your application, the processing of your loan application for unconditional loan approval is much quicker. This ensures that you don’t lose the home by breaching the 14-day finance clause to secure finance.  
• No finance worries.  Another advantage is that you can focus all your efforts on house hunting rather than having to worry about finance at the same time.

So, if you have had any thoughts of possibly buying property or you have already started looking but haven’t yet found the right property, a Pre-Approved Loan can be very useful. It will clearly identify your maximum purchase price and will give you both confidence and peace of mind.  

Book your free assessment and strategy session to find out how much you will be pre-approved for.

Stamp duty costs are dependent on the state or territory you live in and will potentially be reduced by any first home buyer rebates applicable to you in your state or territory.

Use our stamp duty calculator to work out an approximate cost, or give us a quick call and we’ll give you a definite costing on stamp duty and all the other costs associated with buying property.

Lenders are required to purchase insurance (LMI) on all home loans where the borrower has paid less than 20% deposit.

The LMI is an insurance policy that protects the lender if you default on your mortgage payments, but the premium is always charged to the borrower and must be paid as a lump sum or one-off payment before the loan is drawn.  LMI premiums increase on a sliding scale as the risk increases. The lower the deposit, the higher the risk to the lender, and therefore the higher the premium.The premiums also increase with the size of the loan. What is worth noting is that some lenders charge higher premiums than others, which is what our loan advisers will show you when they take you through the process of choosing the right loan.

Yes! Even by dropping the Loan to Value Ratio (LVR) by just 1% can significantly reduce the size of the LMI premium. 

Lenders Mortgage Insurance (LMI) premiums increase on a sliding scale as the risk increases.  The lower the deposit is, the higher the risk to the lender and the higher the premium.  The premiums also increase with the size of the loan. Different lenders also charge different premiums and that’s something that our mortgage broker’s will be looking out for when they shop for your best loan.

But what’s worth noting is that there can be a significant drop in the premium if you potentially only drop the LVR by even 1%.  Here is an example: With a property purchase of $600,000 and a loan at 95%, the LMI for one of our clients was $16,733, and the home deposit was $30,000. Now if the loan was at an LVR of 94%, the LMI would have been $14,705, and the deposit $36,000.  So for an extra $6000 deposit the borrower could have saved $2,028 in LMI premium.  That’s a whopping saving of 33.8% on your money, and then the home loan also starts off lower.  So be aware of the ‘sliding scale charging’ on LMI and ask our brokers what an extra $1000 deposit could save you.

Here are some ways to reduce the cost of LMI to Zero:

• Using a family member’s guarantee – if the borrower is fortunate enough to have a close family member offer the equity that they have in another property, some lenders will take that property as collateral security to the purchase property. The borrower could then pay $0 deposit and borrow 100% of the purchase price without paying for any mortgage insurance.
• Using the First Home Guarantee - With the FHBG, the government will underwrite your home loan and act as a guarantor, which means you won’t have to pay LMI because the lender is not forced to insure the loan. The FHBG is available for first time home buyers but there are a limited number of places available on the scheme so please ask your broker about availability.
• Using the Family Home Guarantee - This scheme aims to help single parents with at least one dependent child purchase a home with as little as 2% deposit, without paying any mortgage insurance premium because the government underwrites the risk.  

To find out more about reducing the cost of LMI, or to find out if you are eligible for government support, contact our expert brokers.

There are a number of grants and schemes available to help first home buyers get on the property ladder, including:

• First Home Owner Grant (FHOG) - receive a one-off grant for the purchase or build of a new home. Funding and eligibility criteria are specific to the state or territory you live in.  As of 01/2024, Qld = $30,000, NSW = $10,000, Victoria = $10,000, SA = $15,000, WA = $10,000, NT = $10,000, TAS = $30,000.  Let your broker know if you are applying for the grant.

• First Home Guarantee (FHBG) - Lenders are required to purchase insurance on all home loans with an LVR > 80%, (< 20% deposit), and the premium is charged to the borrower. The LMI is an insurance that protects the lender if you default on your mortgage payments. With the FHBG, the government will underwrite your home loan and act as a guarantor, ensuring that you will not be required to pay LMI because the lender is not forced to insure the loan.  That’s fantastic news for first time home borrowers because LMI is not cheap! However, the government limits the spots available on the scheme so if you are thinking of getting into the property market, get in quickly and grab your spot by giving us a call and we will get one of our first home buyer mortgage broker specialists to book you a spot on the scheme. 

• Family Home Guarantee (FHG) - This scheme aims to help single parents with at least one dependent child purchase a home with as little as 2% deposit and pay no Lender Mortgage Insurance (LMI).  The eligible single parent may be a first-time home buyer or a previous homeowner.  There are limited places available each financial year, so if you think that you might be eligible, please contact us.

• First Home Super Saver Scheme - If you have made voluntary contribution payments to your super, you can withdraw them (to a maximum of $50,000) to use as a deposit on the purchase of your first property. 

This is an excellent tax effective saving scheme if you are not yet ready to buy, because your contributions to your super are only charged at a tax rate of 15%, which will be much lower than your marginal rate of tax. (Note that limitations do apply.) The returns on your cash invested into super should also be much higher than cash deposit rates offered by banks.  If you would like help with your budget and with setting up a savings program, please contact us.

• One-off stamp duty concessions for first home buyers - concessions are available to reduce the amount of transfer duty (or stamp duty) that you need to pay.

Use our handy Stamp Duty Calculator.

Please note that the grants and schemes are offered by state and territory governments and will vary depending on where you live. If you need any advice about eligibility or applying for a grant, give us a call or Book an Appointment and one of our specialist brokers will be happy to help.

Most property contracts will have a cooling-off period. When you first sign the contract, it’s considered to be conditional. During this time, you usually have a pre-determined cooling-off period to cancel the contract for a small penalty.

Queensland real estate contracts also typically have 14 days from signing the contract to ensure that your finance has been approved, and to appoint a building inspector to carry out structural checks on the property and to perform a pest inspection. If you are happy with the independent reports generated on the property and feel confident that all your conditions have been satisfied, you can decide to proceed to the ‘point of no return’ where the sale becomes unconditional and from that point on, you can no longer back out. Take a look at ‘the 3 important stages of a Property Purchase Contract that you should know’ for a better idea of the timeline and steps involved.

The 3 important stages of a Property Contract that you should know.

If this is your first step onto the property ladder, it is extremely helpful if you gain an understanding of the process of purchasing property before you go out and make that first offer!  What’s very important for you is to understand when a contract is “conditional” and when it is “unconditional.”

Here is a basic description of the stages of a property purchase and reading through this will arm you with the information that will give you peace of mind.  It may also help you ask the right questions of the real estate agent and your conveyancer.  Our Multi Choice Mortgage Brokers will also give you plenty of support and assistance when it comes to understanding the process of making an offer on a property.

Before continuing, an important point to note is that you should always seek professional advice before committing yourself to any legal contract.

Stage 1 – Get Loan Pre-Approval & make an offer.

Prior to house hunting it is advisable to make application for a loan in order to have a loan approved for you before you sign a purchase contract on a property.  A Multi-Choice mortgage broker can secure a pre-approval for you with minimum fuss with the lender of your choice which you will be able to select from over 60 different lenders, from all the major banks that everyone knows of to lenders that very few people have heard of.  Our experienced mortgage brokers use dedicated software and of course their knowledge of the different lenders to help you choose the right loan.  You can either elect to have a loan approved for a specific sum or alternatively you can apply for a maximum loan. Please note that the maximum loan offered by lenders differs vastly from one bank to another. The mortgage broker will very simply show you maximum limits offered by different lenders so please contact us today to put yourself in a strong position for your property purchase. A pre-approved loan won’t cost you a cent but will certainly give you plenty of confidence when you start house hunting and especially when you make an offer, it might even help you negotiate a better price!  

Once your offer has been made in writing (with conditions), and the seller has accepted it and signed it, you have a legally binding contract that gives you the right to proceed to financing the purchase.

‍Stage 2 – The Contract is Conditional.

If you purchase at an auction the contract is unconditional from the moment that you successfully raise your hand at the auction and the auctioneer shouts ‘sold’. If not, most property contracts will have a cooling off period for the buyer that gives the buyer the option of cancelling the contract for a small penalty.

Once you have signed the property purchase contract it becomes a conditional contract, that is, if you have made the offer subject to certain conditions.

The typical conditions made by buyers are finance and, building and pest inspections. The contract, as depicted in the diagram below, is conditional upon a 14-day finance clause and a 7-day building and pest inspection clause. This means that you, the buyer, have 14 days to do your due diligence on the property before you are required to fully commit to the purchase.   Within 7 days you must make an appointment for a building inspector to conduct a thorough inspection on the building to check if to see if there are any building flaws or any pest damage. 

Once you have received the building and pest reports from the respective professionals and you are satisfied with the condition of the house, you are ready to allow the contract to proceed to the unconditional status except of course if you are still waiting for the bank to give you the green light or the thumbs up on the finance.  

Banks vary tremendously in the time it takes them to approve home loans, so if your contract is time sensitive, make sure that you are using a broker who fully understands which lenders to direct you to!  Losing a property because the bank was simply too slow in their processing could cost a potential fortune, never mind ‘drive the buyers crazy’ because they lost the home that they searched so very hard for! 

Only once the bank has approved the loan that your mortgage broker lodged for you, should you go unconditional on your purchase contract because that means that you will then be fully committed.  It is the point of no return and you have essentially ‘bought the property’, except for the fact that the funds must still be transferred to the seller on the settlement date recorded on the contract.

Please be sure to communicate with your conveyancer before letting the estate agent know that all is fine and okay with the building and pest inspections and that your finance is approved.  

Another important point is that you are responsible for the property from this point on and you will therefore need to arrange an insurance cover note on the property being purchased.

Please also make the decision to act promptly with all the paperwork!  As soon as you have signed a contract the clock starts ticking!  The first thing to do is to email a copy of the contract to your mortgage broker ASAP. This way there will be no time wasted in ordering bank valuations, if required, which can sometimes take up to five working days if the valuer is delayed. Waiting on unconditional finance approval with the deadline looming is no fun for anyone!

Also please note that a pre-approval certificate is still no absolute guarantee that the bank will lend you the money!  It is an “approval with conditions” such as “the purchase property being deemed suitable security for the loan” (which is normally not an issue if the property is in a major metropolitan area). In other words, you cannot go unconditional on a contract if you only have a pre-approved loan that the bank has not changed to a fully approved unconditional loan offer for the purchase of your specific property. 

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Stage 3 – The Unconditional Contract.

Once you have met all your conditions of purchase you can then proceed to stage 3, the “point of no return”, which is the point at which the contract becomes unconditional. 

At that point the vendor usually will expect a large enough deposit that clearly evidences your intention to settle. Should you fail to settle as per the contract terms, you will be in breach of your contract and the vendor could expect you to forfeit your deposit – in other words the deposit is “hurt money”, funds that you stand to lose if you breach your agreement to purchase. The vendor is also entitled to pursue it further in a court of law for any perceived loss suffered by the vendor if the purchaser fails to proceed to settle. Therefore, make certain you communicate with your solicitor through this phase of the contract and do not progress to unconditional contract status before getting the loan approval from our office or your Multi-Choice mortgage broker.

To summarise, do not go unconditional on the contract until you are absolutely certain that the finance is in place. The bank must have articulated their intension to lend you sufficient money for you to purchase the property and you must see this in writing before you give the go-ahead to proceed to an unconditional contract.

As a first-time buyer, you may be overwhelmed by the sheer number of mortgages available on the market, as well as the complexities of the application process.  But with our software and our experience, we make it easy.

Everybody should be using the services of an experienced mortgage broker when either purchasing or refinancing property, for the following reasons: 

• Firstly, it’s a totally FREE service to the borrower (because the bank pays for it), and 
• You get specialised advice from experienced finance experts who will not only help you find the best lender to use, but they will also significantly improve your chance of success.  
• Through the mortgage broker you get access to hundreds of different loans from over 60 different lenders with one phone call, and better choice means a better deal.  
• And with the wide choice of lenders, the broker’s up-to-date knowledge, computer software to analyse the loan options and the broker’s experience, the borrower has a much better chance of having their loan approved as well as the chance of securing a better loan. 
• It’s also a whole lot easier for the borrower when someone else is doing all the loan comparisons and the running around!

At Multi-Choice, we do all the hard work to find you the right loan, and we’ll improve your chances of getting your loan approved. We make it Simple. Talk to a home loan expert today and see how we can help you find your best deal.