Avoid These Variable Rate Mistakes When Buying Your First Home

Understanding Variable Interest Rates for First Home Buyers

When buying your first home in Revesby, understanding variable interest rates is crucial for making informed decisions about your home loan. Unlike fixed interest rates that remain unchanged for a set period, variable interest rates fluctuate based on market conditions and lender policies.

Variable rates offer flexibility and potential benefits that appeal to many first time home buyers. When official interest rates decrease, your repayments may reduce accordingly. However, the opposite is also true - when rates rise, your monthly repayments will increase.

Key Benefits of Variable Rate Home Loans

Variable rate loans typically provide several advantages for first home buyers:

• Offset account options: Many variable rate packages include offset accounts that can reduce the interest you pay on your loan amount
• Additional repayment flexibility: Make extra repayments without penalty fees
• Redraw facilities: Access additional repayments you've made if needed
• Interest rate discounts: Lenders often provide better pricing on variable products

First Home Buyer Schemes and Variable Rates

As a first time home buyer in Revesby, you can access various government schemes while choosing a variable rate loan. The First Home Guarantee Scheme allows eligible buyers to purchase with as little as 5% deposit, avoiding lenders mortgage insurance (LMI).

First home owner grants (FHOG) and stamp duty concessions in NSW can significantly reduce your upfront costs. These first time home buyer programs work alongside any interest rate type, including variable options.

Calculating Your Borrowing Capacity

Before applying for a home loan, understanding your borrowing capacity is essential. Lenders assess your financial situation using various factors:

1. Income verification: Regular salary, overtime, and other income sources
2. Existing debts: Credit cards, personal loans, and other commitments
3. Living expenses: Monthly costs for food, transport, and lifestyle
4. Loan to value ratio (LVR): The percentage of the property value you're borrowing

Variable rate loans don't typically affect your borrowing capacity differently than fixed rates, but lenders may apply slightly higher assessment rates to account for potential rate increases.

The Application Process for Variable Rate Loans

The application process for variable rate home loans involves several steps:

Documentation Required:
• Recent payslips and employment contracts
• Bank statements showing savings history
• Tax returns and PAYG summaries
• Identification documents

Getting Pre-approved:
Securing pre-approval before house hunting provides confidence when making offers. This process typically takes 3-5 business days and helps establish your maximum loan amount.

Access to Multiple Lenders and Packages

Working with WealthStreet Mortgage Brokers means you can access home loan options from banks and lenders across Australia. Rather than being limited to one institution's products, we provide access to banks and lenders nationwide, including:

• Major banks with comprehensive variable rate packages
• Regional lenders offering specialised first time home buyer programs
• Non-bank lenders with flexible lending criteria

This broad access ensures you receive suitable options for your specific financial situation and property goals.

Managing Variable Rate Risk

While variable rates offer flexibility, it's important to prepare for potential rate increases:

Budget for Rate Changes:
Consider your repayment capacity if rates increase by 1-2%. Ensure your household budget can accommodate higher repayments without financial stress.

Utilise Offset Accounts:
Maximise any offset account benefits by depositing your salary and savings. Every dollar in offset reduces the interest charged on your home loan.

Make Additional Repayments:
When possible, make extra repayments during periods of lower rates. This builds equity faster and provides a buffer for future rate increases.

Investment Opportunities Down the Track

Many first home buyers eventually consider investment properties. Variable rate loans on your primary residence can provide experience with rate movements before exploring investment loan options. Understanding how variable rates affect your repayments helps when planning future property investments.

Professional Support in Revesby

Choosing the right variable rate home loan requires careful consideration of your circumstances, goals, and risk tolerance. The property market continues evolving, and having professional guidance ensures you make informed decisions about your first home purchase.

As your local mortgage broker in Revesby, we understand the area's property market dynamics and can match you with suitable lenders and loan products. Our streamlined application process helps reduce the time between application and settlement.

Variable rate loans remain popular among first home buyers for good reason - they offer flexibility, features, and potential savings that align with many buyers' needs. However, every financial situation is unique, and what works for one buyer may not suit another.

Call one of our team or book an appointment at a time that works for you to discuss your variable rate home loan options and start your journey toward homeownership in Revesby.