Which First Home Buyer Loan is Best For Me?

January 11, 2023
first home buyer loan

Key takeaways:

  • As a first-home buyer, it is essential to research all available loan products in your state.
  • The different loan types include variable loans, fixed loans, basic loans and low-doc loans.
  • If you are paying less than a 20% deposit, you need to pay lenders’ mortgage insurance.

Buying your first home in Australia is a significant and exciting milestone, but it can also be a daunting experience, especially when it comes to answering the question, ‘which home buyer loan is best for me?’

When you buy a home in Australia, a wide range of options are on offer—it can be overwhelming to know which one will suit your individual circumstances. That’s where we come in!

We’ll explore the four different types of first home buyer loans available in Australia, and help you understand the pros and cons of each one, so you can choose the best loan product based on the features offered.

Different types of home loans in Australia

Variable rate home loans

With a variable rate loan, the interest rate changes according to market conditions. This means that if interest rates go down, your repayments will also go down, but if they go up, your repayments will increase.


  • Interest rates can decrease, resulting in lower repayments
  • Offers more flexibility, such as the ability to make extra repayments or redraw on them
  • May offer more features and options than fixed rate loans


  • Interest rates can increase, resulting in higher repayments
  • Greater level of uncertainty compared to fixed rate loans

Fixed rate home loans

With a fixed rate loan, the interest rate is set for a specific period of time, usually between one and five years. This means that your repayments will remain the same for that period, regardless of what happens with interest rates.


  • Repayments remain the same for a set period of time, regardless of interest rate changes
  • Offer a greater level of certainty


  • Limited in terms of repayments and may be more restrictive than variable rate loans
  • If interest rates decrease, the borrower will not benefit from lower repayments

Basic home loans

These loans are typically more basic and come with a lower interest rate, but also have less features and options than standard home loans.


  • Typically come with a lower interest rate


  • Less features and options than standard home loans
  • Less flexible than variable home loans

Offset home loans

first home buyer loan

Offset home loans are usually linked to a transaction or savings account, which allows you to offset the balance of that account against the outstanding balance of your home loan. This can help to reduce the amount of interest you pay on your loan.


  • Can help to reduce the amount of interest paid on the loan
  • Flexible options with the ability to offset savings or transaction account balance against the loan


  • May have higher interest rates than standard home loans
  • Additional account management required

Low-doc home loans

Low-doc loans are designed for self-employed borrowers or those who have difficulty providing traditional documentation, and usually require less documentation than standard loans.


  • Designed for self-employed borrowers or those who have difficulty providing traditional documentation
  • Require less documentation than standard loans


  • May have higher interest rates than standard home loans
  • Fewer loan options available
  • May require additional security

First-home buyer loan providers in Australia

first home buyer loan

HSBC – discounted home value loan

HSBC is one of the most trustworthy and reliable loan providers. The most lucrative feature of the home loans by this company is free unlimited home loan repayments.

HSBC offers home loans at a 4.89% interest rate and a 4.90% comparison rate. The monthly loan payment for a home value loan is $797. Also, there are no monthly or upfront fees.

Green home loan

Green home loan is for eco-conscious people who wish to incorporate environment-friendly practices into their routine life. This loan product offers a first-home buyer loan with principal and interest rates at 4.88% with a 5.30% comp rate.

Home loans with an interest-only period are not available here. Geen home loan offers unlimited additional repayments, zero ongoing or monthly fees, unlimited redraws, and up to 30 years of the loan term.

You can use the company’s mortgage calculator to calculate monthly mortgage repayments based on your property value. Other green loan products available at include solar home loans and smart booster home loans.

OneTwo rate-reducing home loan

OneTwo is a leading loan provider in Australia, famous for offering low-cost loans with convenient monthly repayments. The rate-reducing home loan by OneTwo is a variable interest rate loan. This variable interest rate starts from 4.84% with a 4.76% comparison rate.

Low-interest rates are a major selling point for this mortgage option. You can get up to 0.15% off your monthly repayments as you keep paying off the home loan.

tic:toc variable home loan

tic:toc is a technology company that offers home loans directly to consumers. The home loan experts and researchers at tic:toc have significant market experience and research abilities. Utilizing the brilliant capabilities of these experts ensures the provision of low-cost loans for home buyers.

The variable home loan by tic:toc is an excellent option for first-home buyers to avail home loans with low-interest rates within a short time. This home loan deposit scheme offers up to 30 years of loan term at a 4.74% interest rate and a 4.75% comparison rate.

If you avail of this loan offer, you will have to pay $2,501 monthly. You can also enjoy the 100% offset account feature with this loan product.

The minimum deposit for a variable home loan is 10%. tic:toc may also charge lenders mortgage insurance (LMI).

All these loan products are reliable and offer consumer-friendly features. You can research and compare home loans mentioned here and choose the best one based on personal requirements.

Things to consider when choosing a first-buyer home loan

first home buyer loan

Lenders mortgage insurance

As a general rule, if the buyer is paying less than a 20% deposit of the loan amount, the lender will ask for the lender’s mortgage insurance. The amount of LMI varies based on the property’s value, loan deposit, and loan amount.

Stamp duty concessions

Home buyers need to stamp duty based on their property value. This expense could be in the hundreds of thousands. However, first-home buyers can get an exemption from these costs through stamp duty concessions offered by the government.

Each Australian state has different rules and regulations for stamp duty concession. For instance, the first home buyers in North South Wales get an exemption from paying stamp duty on property worth less than $650,000.

First-home-owner grant

The First Home Owner Grant (FHOG) is a government scheme launched in 2000. This government scheme allows first-home buyers to avail of cash grants that may reach up to $10,000 based on various factors.

The rules and regulations for this vary from state to state in Australia. Generally, you should purchase an off-the-plan or new property of a specific value to qualify for the first-home-owners grant.

Speaking to a mortgage broker

A mortgage broker can help you navigate the complex and often confusing world of home loans. They have access to a wide range of loan products from a variety of lenders, including banks, credit unions, and non-traditional lenders.

A mortgage broker can help you compare loan options and determine which one is the best fit for your individual circumstances, such as your credit score, income, and the type of property you’re looking to purchase.

They also help you in the process of the home loan application, gathering all the documents and submitting it for you and also helping you negotiate the best deal possible with the lender, which can potentially save you thousands of dollars over the life of your loan.

Moreover, brokers have access to exclusive loan products and deals that aren’t available to the general public, which can also help you secure a better rate or more favourable terms. In addition, a mortgage broker can act as a liaison between you and the lender, helping to expedite the loan process and keep things on track.

To discuss your financial situation with a home loans expert, get in touch with Soho Home loans.

Soho is your expert team in Australian real estate, offering an innovative platform for effortless property searches. With deep insights into buying, renting, and market trends, we guide you to make informed decisions, whether it's your first home or exploring new suburbs.
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Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier.