Residential Loans - Hero Finance

What is a home loan?

A home loan, or mortgage, is a type of loan provided by banks or other financial institutions to help you buy a home. The borrower agrees to repay the loan with interest over a specified period, typically 25 to 30 years. The property serves as collateral for the loan.

What types of home loans are available in Australia?

There are several types of home loans available, including:

- Variable Rate Loans: The interest rate can change over time based on the market.
- Fixed Rate Loans: The interest rate remains the same for a set period, usually 1-5 years.
- Split Loans: Combine features of both variable and fixed rate loans.
- Interest-Only Loans: Pay only the interest for a specified period, after which regular repayments of principal and interest commence.

What are the eligibility criteria for a home loan?

Eligibility criteria generally include:

- A good credit score.
- Proof of stable income and employment.
- A sufficient deposit, typically 20% of the property's value, although lower deposits may be accepted with lenders mortgage insurance (LMI).
- Meeting the lender's specific requirements and criteria.

What assistance is available for first home buyers?

First home buyers in Australia can access several assistance programs, including:

- First Home Owner Grant (FHOG): A one-off payment to help with the costs of buying your first home.
- First Home Loan Deposit Scheme: Allows eligible first home buyers to purchase a home with a deposit as low as 5% without needing to pay LMI.
- Stamp Duty Concessions: Reduced or waived stamp duty for eligible first home buyers.

How much deposit do I need as a first home buyer?

While a 20% deposit is standard to avoid paying LMI, first home buyers can often secure a home loan with a smaller deposit through schemes like the First Home Loan Deposit Scheme, which requires as little as 5% deposit.

How can I use the equity in my current home to buy my next home?

Equity is the difference between your home's current market value and the remaining mortgage balance. You can use this equity as a deposit for your next home, reducing the amount you need to borrow. This can be done through options like a home equity loan or line of credit.

What should I consider when upgrading to my next home?

When upgrading to your next home, consider:

- Current Market Conditions: Understand whether it’s a buyer’s or seller’s market.
- Loan Options: Compare different loan products to find the best fit.
- Additional Costs: Factor in stamp duty, legal fees, and moving costs.
- Repayment Strategy: Ensure you have a realistic plan for repaying your new loan.