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First home loan

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First home loan - Community First Credit Union

First home loan


Getting your first home loan can feel a little daunting as it's a big decision and there are a lot of things you need to take in to consideration.

That's why we've put together this page to help you understand what is involved and what you can expect.


Saving for a deposit

Saving for a deposit is the first step towards buying your first home. Having a demonstrated savings history is important as it strengthens your application by showing your financial institution that you are capable of committing to regular financial commitments.

Work out how much you can afford to save by setting your budget using our free budget planner, and ensure you keep your savings separate to your spending by setting up a regular savings plan in to a savings account like our Bonus Saver Account.


Working out how much you can afford

Once you've worked out how much you can afford to save on a regular basis and have your regular savings plan set up, you need to work out how much you can afford to spend. You should do this before you work out how much deposit you need as how much you can afford will determine the amount of deposit you need.

You can estimate how much you can afford to borrow using our borrowing power calculator. Now that you've worked out your budget as well, you should then make sure you can comfortably afford the repayments on this amount by using our loan repayments calculator.

When calculating how much you can afford to spend, you should take in to account how much of the purchase price you want to borrow. The less you want to borrow, the bigger the deposit you will need, and the lower your repayments will be.

The next section below discusses how you can work out how much deposit you will need.


Working out how much deposit you need

Now that you've worked out how much you can afford to borrow and repay, you now need to work out how much deposit you need to come up with to make it happen. There are three questions to ask yourself:


What upfront costs are there?

In general, fees, charges, taxes and stamp duty amount to approximately 5% of the purchase price of the property. Below is a list of the upfront costs you will need to consider when purchasing your first home:

Type of cost
What you need to know
Home loan application fees
  • Application fees vary between lenders. Our current home loan application fee is $500
Government charges
  • We collect government charges on behalf of the government. These costs can be a mixture of fixed and variable costs that change according to the purchase price of the property and the state you live in.
Legal/conveyancing fees
  • You should allow between $1,500 and $2,500 for the cost of having your solicitor or conveyancer preparing your mortgage documents and arranging settlement of your home loan.
Stamp duty
  • The stamp duty applicable varies by state - you should check with your state's relevant government agency to determine how stamp duty is calculated and what exemptions are available.
Your deposit (minimum 5% deposit is required)
  • Using a $300,000 mortgage as an example, you would need $15,000 if you are putting up a 5% deposit, or $60,000 if you are putting up a 20% deposit.
Lenders mortgage insurance (payable only if you borrow more than 80% of the purchase price)
  • Lender's Mortgage Insurance (LMI) is payable where your home loan represents between 80% and 95% of the purchase price. If you borrow less than 80% of the purchase price however, you will not be required to pay LMI

How much of the purchase price should I borrow?

If you want to borrow more than 80% of the purchase price, you will need to pay lenders mortgage insurance (LMI) on your home loan. LMI is payable prior to settlement of your home loan. The minimum deposit you need to provide is 5% which will require you to pay LMI.

Alternatively, if you choose to borrow less than 80% of the purchase price, you will not need to pay lenders mortgage insurance however you will need to come up with a larger deposit.

When deciding how much of the purchase price to borrow, you should take in to account your ability to repay different loan amounts and how long it will take you to save for larger deposits.

In slow or decreasing markets, you could take the extra time to save for a bigger deposit as you would save money on interest for every extra dollar you don't borrow, and house prices may not change much during that time. Subsequently, in a rising market, it could be worth your while to purchase a property as soon as you can, as the amount you pay in mortgage insurance could actually be less than the amount your property increases in value during the time it would have taken you to save the extra deposit.

What first home buyers exemptions are there?

The next section below details what first home buyer exemptions are currently available.


Available first home buyer exemptions

The benefits you receive as a first home buyer differ by state. You should therefore refer to the Office of State Revenue for specific details of first home buyer benefits in your state.




Making sense of the different types of home loans available

Below is a summary of the different types of home loans available:

Type of home loan
Description
  • Honeymoon home loans
  • Honeymoon home loans offer you a discounted rate for an initial period before reverting to the standard variable rate. Community First's honeymoon home loan has a discounted rate period of 12 months. Honeymoon loans can represent great value and a good option for first home buyers wanting a reduced interest rate for a term while adjusting to their new financial arrangements. The reduced interest rate can also help free up some cash to help you cover the costs of moving or perhaps buying furniture.
  • Variable home loans
  • Variable home loans are home loans that have a variable interest rate. Changes to the interest rate are made by the financial institution and tend to move in line with the market. Standard variable home loans usually come with a wide range of flexible features and benefits.
  • Basic variable home loans
  • Basic variable home loans are like standard variable home loans, only they have less features in return for a slightly lower interest rate. These loans can be good for those who don't wish to pay for those features they don't need.
  • Fixed home loans
  • Fixed home loans allow you to fix the interest rate on your home loan for 1, 2 or 3 years. They are good for those who are concerned about rising interest rates or need certainty around what their regular repayments will be.
  • Package home loans
  • Package home loans reward you with an ongoing interest rate discount, transaction fee free banking and a range of other discounts on financial products and services in return for an annual fee. They represent excellent value if you are looking to combine all your banking needs with the one financial institution.

What you may need to apply

  • Your personal details, such as your current and previous address, phone number and email address
  • Details of your income, employment, any assets (e.g. home, car or savings) and debts (mortgages, loans and credit cards) you currently have.

You will also be asked for documentation to support your loan such as ID, proof of your income via payslips or tax summaries, and any statements of loans, credit cards and savings accounts you may have.

Full approval of your loan occurs once the financial institution has reviewed and verified all supporting documentation you are required to provide.


How to apply for a home loan with Community First

It might be a good idea to meet with the financial institution you plan on applying for a home loan with so you can discuss which home loan is right for you and so you can have all your questions answered.

At Community First, you can book a Mobile Lender to visit you at a time and place that suits you. Alternatively, you can visit your nearest store, apply online or call us on 1300 13 22 77.

You will generally be able to apply for a home loan in Australia if you:

  • Are an Australian citizen or are a permanent resident
  • You are not bankrupt
  • You do not have a history of outstanding credit defaults
  • You are over 18 years of age



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