The Australian First Home Owner Grant (FHOG) is a national scheme funded by the Federal Government, but administered through each state or territory Revenue Office. The grant offers first home buyers $7,000 towards their first home. From June 1 2010, those intending to buy or build new houses outside of Southeast Queensland will have the grant boosted by an additional $4,000, taking it up to a total of $11,000.
To eligible for the grant
To be eligible for the grant, you must be an Australian citizen or a permanent resident of Australia. You must be buying or building your first home in Australia and you must have the intention of living in the home as your primary residence within 12 months of settlement.
There are no restriction as to your income or the area in which you plan to buy or build. However, if you are planning to purchase your first home with another person, you must both meet the eligibility requirements to receive the grant.
To apply for the grant
In most cases the lenders are able to act as agents for the Revenue Office and help you complete the relevant forms as part of your home loan application.
For information visit:
New South Wales: State Revenue (NSW)
South Australia: Revenue (SA)
Tasmania: First Home Owners Grant (TAS)
Victoria: The State Revenue Office (Vic)
Western Australia: First Home Owners Grant (WA)
Queensland: Office of State Revenue (QLD)
Sunday, June 5, 2011
Thursday, June 2, 2011
Types Of Home Loans
Here are an overview of the different types of home loans available in the market today. You can go through and find out which ones is the right ones for you.
1. Introductory home loan
The interest rate is usually low to attract borrowers. Also known as a honeymoon rate, this rate generally lasts only for around 12 months before it rises. Rates can be fixed or capped. Most revert to the standard rates at the end of the honeymoon period.
2. Variable rate home loan
The rate charged on a variable loan moves up or down in accordance with movements in interest rates, as set by the Reserve Bank. Basic variable loans generally have fewer loan features than a standard variable loan. Basic variable loans are suitable if you are looking to pay off a consistent amount over the full term of the loan, but are not suitable if you are looking to pay off your mortgage quickly.
3. Fixed rate home loan
A fixed rate loan is a loan that has a fixed interest rate and therefore fixed loan repayments. The time period of these loans can vary, but you can usually “lock in” your repayments for between 1-5 years. At the end of the fixed loan period you can decide whether to fix the loan again for another period of time at the current market rates or convert the loan to a variable interest rate for the remaining time left of the loan.
4. Split rate home loan
A split rate loan is a loan that has one portion of the loan fixed and one portion variable. You can select how much to allocate to each.
5. Interest-only home loans
You repay only the interest on the principal during the term of the loan; therefore, repayments are lower than with a standard principal and interest loan. At the end of the interest only period - usually one to five years - you must start making Principal and Interest Repayments over the remaining term of the loan.
6. Line of credit home loan
This type of property loan revolves around equity built up in your property and allows access to funds when needed. Each month the loan account balance is reduced by the amount of cash coming in and increased by the amount paid on the credit card or withdrawn in cash. However, they can be very costly if the balance of the line of credit is not regularly reduced. It requires an interest-only payment as a minimum each month, which can add up to a lot of interest over the long term.
7. Low-doc home loan
A low-doc or no-doc mortgage is ideally suited for investors or self-employed borrowers looking to refinance, purchase or renovate. No tax returns or financial reports are required.
8. Non-conforming home loan
People with poor credit ratings often have trouble sourcing a home loan. Many lenders now offer what are known as ‘non-conforming loans’ for people in this type of situation. While lenders are willing to overlook prior credit problems, they will want to see some evidence of your ability to repay the loan. A larger deposit than is required for traditional loans will generally be required also.
1. Introductory home loan
The interest rate is usually low to attract borrowers. Also known as a honeymoon rate, this rate generally lasts only for around 12 months before it rises. Rates can be fixed or capped. Most revert to the standard rates at the end of the honeymoon period.
2. Variable rate home loan
The rate charged on a variable loan moves up or down in accordance with movements in interest rates, as set by the Reserve Bank. Basic variable loans generally have fewer loan features than a standard variable loan. Basic variable loans are suitable if you are looking to pay off a consistent amount over the full term of the loan, but are not suitable if you are looking to pay off your mortgage quickly.
3. Fixed rate home loan
A fixed rate loan is a loan that has a fixed interest rate and therefore fixed loan repayments. The time period of these loans can vary, but you can usually “lock in” your repayments for between 1-5 years. At the end of the fixed loan period you can decide whether to fix the loan again for another period of time at the current market rates or convert the loan to a variable interest rate for the remaining time left of the loan.
4. Split rate home loan
A split rate loan is a loan that has one portion of the loan fixed and one portion variable. You can select how much to allocate to each.
5. Interest-only home loans
You repay only the interest on the principal during the term of the loan; therefore, repayments are lower than with a standard principal and interest loan. At the end of the interest only period - usually one to five years - you must start making Principal and Interest Repayments over the remaining term of the loan.
6. Line of credit home loan
This type of property loan revolves around equity built up in your property and allows access to funds when needed. Each month the loan account balance is reduced by the amount of cash coming in and increased by the amount paid on the credit card or withdrawn in cash. However, they can be very costly if the balance of the line of credit is not regularly reduced. It requires an interest-only payment as a minimum each month, which can add up to a lot of interest over the long term.
7. Low-doc home loan
A low-doc or no-doc mortgage is ideally suited for investors or self-employed borrowers looking to refinance, purchase or renovate. No tax returns or financial reports are required.
8. Non-conforming home loan
People with poor credit ratings often have trouble sourcing a home loan. Many lenders now offer what are known as ‘non-conforming loans’ for people in this type of situation. While lenders are willing to overlook prior credit problems, they will want to see some evidence of your ability to repay the loan. A larger deposit than is required for traditional loans will generally be required also.
Home Loan Rate
A Fixed Or Variable Rate
The toughest of home loan rate decision of all is whether to lock in an interest rate or go for a variable rate. A fixed rate gives you security, but a variable rate can add to your flexibility and cut your costs.
As you begin looking for a home loan, you'll come across two main types of loans: fixed and variable. Which one you choose depends on your finances circumstances, the features you need in a loan, how long you plan to own the property and whether you believe interest rates will rise or fall. The good news is that as competition has intensified, the gap between fixed and variable rates has all but disappeared.
Fixed Rate
With fixed interest loans, the rate is set for a specific period - usually 1 to 5 years. At the end of that time, the loan reverts to a variable rate or you can renegotiate a further fixed term. By locking in your home loan, you are protected against rising interest rates. And your monthly repayments remain the same throughout the fixed-interest period.
On the down side, fixed loans rate have fewer features than variable loans rate, are expensive to break and can attract a slightly higher interest rate.
Variable Rate (has two types)
Basic Variable
The big attraction is the low rate - up to two per cent less than standard variable or fixed rates. For that you get a no-frills loan, with fewer features than a "standard" loan.
But basic loans have changed in the past few years. Most lenders now allow early repayment and fortnightly payments on some of their "basic" loans - so check the fine print carefully.
Standard Variable
Most standard variable loans feature accelerated repayment options, offset, redraw, split loan capacity, variable repayment schedules and portability. If you don't plan to use most of these features, you are paying for window dressing and may be better off with a basic or fixed loan.
Now you know about home loan rate and the different between fixed rate and variable rate. The final decision is up to you to pick which one is suitable for your situation.
The toughest of home loan rate decision of all is whether to lock in an interest rate or go for a variable rate. A fixed rate gives you security, but a variable rate can add to your flexibility and cut your costs.
As you begin looking for a home loan, you'll come across two main types of loans: fixed and variable. Which one you choose depends on your finances circumstances, the features you need in a loan, how long you plan to own the property and whether you believe interest rates will rise or fall. The good news is that as competition has intensified, the gap between fixed and variable rates has all but disappeared.
Fixed Rate
With fixed interest loans, the rate is set for a specific period - usually 1 to 5 years. At the end of that time, the loan reverts to a variable rate or you can renegotiate a further fixed term. By locking in your home loan, you are protected against rising interest rates. And your monthly repayments remain the same throughout the fixed-interest period.
On the down side, fixed loans rate have fewer features than variable loans rate, are expensive to break and can attract a slightly higher interest rate.
Variable Rate (has two types)
Basic Variable
The big attraction is the low rate - up to two per cent less than standard variable or fixed rates. For that you get a no-frills loan, with fewer features than a "standard" loan.
But basic loans have changed in the past few years. Most lenders now allow early repayment and fortnightly payments on some of their "basic" loans - so check the fine print carefully.
Standard Variable
Most standard variable loans feature accelerated repayment options, offset, redraw, split loan capacity, variable repayment schedules and portability. If you don't plan to use most of these features, you are paying for window dressing and may be better off with a basic or fixed loan.
Now you know about home loan rate and the different between fixed rate and variable rate. The final decision is up to you to pick which one is suitable for your situation.
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