Do you know which variable rate features suit first home buyers?

Variable Rate Loans: What Tasmanian Government Employees Need to Know

As a Tasmanian Government employee looking to buy your first home, understanding variable rate loan features can make a significant difference to your financial situation. Variable interest rates move up and down with market conditions, which means your repayments can change over time. Let's explore the key features that could benefit you as a first-time home buyer.

Key Features of Variable Rate Home Loans

Offset Account Benefits

Many variable rate loans come with offset account options. This feature allows you to link your everyday banking to your home loan. The money in your offset account reduces the loan amount on which you pay interest, potentially saving you thousands over the life of your loan.

Interest Rate Discounts

Lenders often provide interest rate discounts for various reasons:
• Professional packages for government employees
• First home buyer programs with reduced rates
• Loyalty discounts for existing customers
• Discounts for maintaining a low loan to value ratio (LVR)

Flexible Repayment Options

Variable rate loans typically offer:
• Extra repayment facilities without penalties
• Redraw features to access additional payments
• Payment frequency choices (weekly, fortnightly, or monthly)

First Home Buyer Support Programs

First Home Owner Grants (FHOG)

Tasmania offers first home owner grants to eligible buyers. These grants can help reduce the upfront costs of buying your first home, making homeownership more accessible.

Home Guarantee Scheme

The federal Home Guarantee Scheme helps eligible first-time buyers purchase property with as little as 5% deposit, avoiding lenders mortgage insurance (LMI). This scheme has specific benefits for government employees and can significantly reduce your initial costs.

Understanding Costs and Requirements

Lenders Mortgage Insurance (LMI)

When your deposit is less than 20% of the property value, you'll typically need to pay LMI. However, some first time home buyer schemes can help you avoid this cost, which could save you thousands of dollars.

Stamp Duty Considerations

Tasmania provides stamp duty concessions for first home buyers on properties under certain values. Understanding these concessions is crucial when calculating your total purchase costs.

The Application Process

Getting Pre-Approved

Before you start house hunting, getting pre-approved helps you understand your borrowing capacity. You'll need to provide:
• Recent pay slips and employment details
• Bank statements from recent months
• Details of your savings and any debts
• Information about the property you want to purchase

Streamlined Application Process

As a government employee, you may have access to streamlined application processes. Many lenders recognise the job security that comes with government employment, which can work in your favour during the application process.

Access to Multiple Lenders

Working with a mortgage broker gives you access to home loan options from banks and lenders across Australia. This means you're not limited to just one lender's packages and can compare:
• Different interest rates and loan features
• Various first time home buyer programs
• Investment loan options for future property purchases
• Professional packages designed for government employees

Making Your Decision

When applying for a home loan, consider:
• Your current financial situation and future plans
• Whether you want the flexibility that comes with variable rates
• The loan amount you need and your preferred LVR
• Additional features like offset accounts that could save you money

Property Market Considerations

Tasmania's property market offers opportunities for first-time buyers, particularly government employees with secure employment. Variable rate loans can be particularly suitable if you expect interest rates to remain stable or decrease, allowing you to benefit from any rate reductions.

As you prepare for buying your first home, remember that choosing the right loan features can impact your finances for years to come. Take time to understand your options and how different variable rate features align with your goals.

Ready to explore your first home loan options? Call one of our team or book an appointment at a time that works for you.