Understanding Apartment Ownership as a First Home Buyer
Buying your first home is an exciting milestone, and for many first home buyers in Western Australia, purchasing an apartment represents an affordable entry point into the property market. Apartments often come with a lower price tag compared to houses, making them an attractive option for those working within a first home buyer budget.
When you're buying your first home, it's essential to understand that apartment ownership differs from purchasing a house. You'll own the space within your apartment's walls, while common areas and the building itself are shared with other owners through a strata scheme. This means you'll pay strata fees that cover maintenance of shared facilities, building insurance, and common area upkeep.
First Home Buyer Eligibility and Grants in Western Australia
As a first home buyer in Western Australia, you may be eligible for several government incentives that can make purchasing an apartment more achievable. Understanding first home buyer eligibility criteria is crucial before you apply for a home loan.
The first home owner grants (FHOG) in Western Australia provides financial assistance to eligible first home buyers. Additionally, first home buyer stamp duty concessions can significantly reduce the upfront costs of purchasing your apartment. These concessions can save you thousands of dollars, which can be redirected towards your deposit or other purchase costs.
The First Home Loan Deposit Scheme allows eligible first home buyers to purchase a property with a deposit as low as 5% without paying Lenders Mortgage Insurance (LMI). The Regional First Home Buyer Guarantee also offers similar benefits for those purchasing in regional areas of Western Australia.
Low Deposit Options for Apartment Buyers
One of the biggest challenges for first home buyers is saving enough for a deposit. Traditional lenders typically require a 20% deposit, but several low deposit options are available specifically designed for first home buyers purchasing apartments.
With a 5% deposit or 10% deposit, you can enter the market sooner. However, these low deposit options usually require you to pay Lenders Mortgage Insurance (LMI), which protects the lender if you default on your loan. LMI can add thousands to your home loan costs, but government schemes like the First Home Loan Deposit Scheme can help you avoid this additional expense.
Some first home buyers also receive assistance through a gift deposit from family members. Many lenders accept genuine savings combined with gift funds, which can help you reach the required deposit amount more quickly. If you're considering this option, ensure you understand your lender's requirements regarding gift deposits.
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Choosing Between Fixed and Variable Interest Rates
When considering Home Loan options for your apartment purchase, you'll need to decide between a fixed interest rate and a variable interest rate, or potentially a combination of both.
A fixed interest rate locks in your rate for a set period, typically between one and five years. This provides certainty around your repayments and protects you from interest rate increases during the fixed period. However, you may miss out on interest rate discounts if rates fall, and fixed rate loans often have fewer features and higher break costs if you need to make changes.
A variable interest rate fluctuates with market conditions. While your repayments may increase if rates rise, you'll benefit from any rate decreases. Variable rate loans typically offer more flexibility, including features like an offset account and redraw facility.
An offset account is a transaction account linked to your home loan. The balance in this account offsets your loan balance when calculating interest, potentially saving you thousands over the life of your loan. A redraw facility allows you to access any extra repayments you've made, providing financial flexibility when needed.
The First Home Loan Application Process
The first home loan application process can seem daunting, but understanding each step will help you feel more confident. Creating a first home buyer checklist can help you stay organised throughout the journey.
Start by obtaining pre-approval for your home loan. Getting pre-approval shows sellers and real estate agents that you're a serious buyer with finance arranged. It also gives you a clear understanding of your borrowing capacity before you start apartment hunting.
During your first home loan application, you'll need to provide various documents including proof of identity, income verification (payslips, tax returns, and bank statements), details of your assets and liabilities, and evidence of your genuine savings. Having these documents ready will speed up the application process.
Your Home Loan application will be assessed based on several factors including your income, employment history, credit history, existing debts, and the property you're purchasing. When buying an apartment, lenders will also assess the strata scheme's financial health and any building issues that might affect the property's value.
Special Considerations for Apartment Purchases
When you apply for a home loan to purchase an apartment, lenders conduct additional due diligence on the property itself. They'll review the strata report, which contains information about the building's financial position, any special levies planned, and the condition of common areas.
Lenders typically want to see that the strata scheme has adequate funds in its sinking fund (used for major repairs and maintenance) and that there are no significant building defects or disputes. Some lenders have restrictions on lending for apartments in certain buildings or locations, so it's worth discussing this early in your property search.
The first home super saver scheme allows eligible first home buyers to save money for their deposit inside their superannuation fund. This can be a tax-effective way to build your deposit faster, though strict rules apply around contributions and withdrawals.
Working with Simple Lending for Your First Home Loan
As experienced mortgage brokers for first home buyers, Simple Lending understands the unique challenges apartment buyers face. We work with multiple lenders to find Home Loan options that suit your circumstances and the specific apartment you're purchasing.
Our team can help you understand which first home buyer grants you're eligible for, calculate your first home buyer budget, and guide you through the entire first home loan application process. We'll ensure you have all the information needed when you apply for a home loan, increasing your chances of approval.
We can also provide advice on whether to choose a fixed interest rate or variable interest rate based on your financial situation and future plans. Our mortgage broking service is designed to make buying your first home as smooth as possible.
Call one of our team or book an appointment at a time that works for you to discuss your first home loan options.
