The best low deposit home loans for first home buyers

When you buy a property, the banks will generally ask that you have a 20 per cent deposit which will allow you to borrow 80 per cent of the value.

However, it is possible to borrow up to 95 per cent of the value and this coupled with the first home buyer’s grant could give you a big leg up in breaking into a market that is becoming increasingly out of reach for many people. 

The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. It is a national scheme, but is administered by individual states and therefore eligibility is different within each state.

If you meet the eligibility criteria set by your state, you will receive a one-off grant that you can use as a deposit.

You can also use this grant with the one off $25,000 Home Builder grant recently announced by the government, for those who are building new homes. 

It should be noted that generally with a low deposit mortgage, you will generally pay a higher interest rate and be required to pay lenders mortgage insurance (LMI).

Low deposit mortgages

You can compare thousands of home loan products through the InfoChoice home loan comparison site

NAB offer a couple of first home buyer friendly loans.

NAB’s Tailored – Choice Package – Principal and Interest loan for owner-occupier borrowers has an attractive fixed home loan rate of 2.19% p.a. (comparison rate 4.02% p.a.) on a two year fixed rate. The NAB Minimum lending of $150,000 applies.

NAB also offers a special rate of 2.69% p.a. (comparison rate 2.69% p.a.) on a NAB Base Variable Rate Home Loan for owner occupiers making principal and interest repayments with less than or equal to 80% total NAB Lending to Value ratio (LVR).

For customers where LVR is higher than 80%, the special rate is 3.04% p.a. (comparison rate 3.04% p.a.). NAB is also waiving the Base Variable Rate Application Fee for new applications, that will save you $600.

Some of the best home loans now listed on InfoChoice that first home buyers should consider include:

Reduce Home Loans Rate Slasher with a variable rate of 2.39 per cent (comparison rate 3.04% p.a.) 

Well Home Loans’ Well Balanced LVR up to 90 per cent has an interest rate of 2.67 per cent (comparison rate 2.70% p.a.)

Low interest rates

If borrowing up to or over 90 per cent of the value of the property is of no concern, but you are looking for low interest rates to ease the burden, you can compare home loan rates and keep up to date with the latest property market outlook in Australia as well as the outlook for interest rates at InfoChoice.

Here are InfoChoice’s top five variable rates (based on a $300,000 loan):

Here are the top five fixed rates (based on a three year, $300,000 loan):

Buying you first home can be daunting, however there are plenty of options available for you to make the cost of buying your first property easier.

Utilise the first home buyer grant, consider whether this can be used along with the Home Builder grant and then look for the lowest rate available to you and whether you need to borrow more than the usually required 80 per cent.  

This update is not financial advice. This article is general news and information.

Home Loans: The comparison rates are based on a secured loan amount of $150,000 and a term of 25 years.

Personal Loans: The comparison rates in this table are based on a loan of $30,000 and a term of 5 years unless otherwise indicated in the product name with^, in which case, the comparison rate is based on a loan of $10,000 and a term of 3 years. The comparison rates are for unsecured personal loans only for the relevant amounts and terms. The comparison rates for car loans and secured personal loans are for secured loans unless indicated otherwise.

WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

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