8 common myths about buying your first home.

ONE: It’s too expensive to buy a home

Your home is most likely the biggest purchase you’ll make in your lifetime. However, this doesn’t mean that it’s impossible to buy a home.

In fact, there have never been more government schemes and grants in place to help Australians purchase their first property. Some schemes include First home buyer stamp duty assistance scheme, First Buyer Choice, Single Parents Scheme and more...

TWO: You need a 20% deposit to buy your first home

While a 20% deposit is generally the number people have in mind as the minimum amount needed to buy a home, this actually isn’t the case. Lenders understand that saving up a six-figure deposit can be tough, which is why you can get a home loan with a deposit as low as 5%.

THREE: Lender’s Mortgage Insurance is there to protect you Lender’s Mortgage Insurance (LMI) is exactly as it sounds: it’s an insurance policy that protects the lender. Lenders hedge their bets on all loans by using third-party insurance companies. If you have a lower deposit, the insurance company will charge a higher premium to your lender as they view the loan as more risky — which the lender will, in turn, pass on to you.

FOUR: Banks won’t lend to me if I’m a sole trader or small business owner.

As a small business owner or sole trader, you can absolutely get a home loan — you just need to go through a different application process to that of a regular PAYG employee. You'll need to provide a long list of documents in order to demonstrate your taxable income and prove that you are able to make your mortgage repayments like your individual tax returns, Corresponding ATO notice of assessment for this period and your Business activity statements (BAS).

FIVE: You can’t get a home loan if you have student loan debt.

It might seem counterintuitive to be able to take out a loan while you’re paying off another loan, but you absolutely can with your student loan. Banks look at your HELP debt based on how much you’re required to pay each year from your annual income, not how much you have owing. While having a HELP debt may lower your borrowing capacity, it definitely won’t restrict your ability to get approved for a home loan.

SIX: Lenders follow the interest rates set by the RBA The RBA cash rate and the interest rates offered by lenders aren’t the same. The RBA cash rate is the interest rate that every bank has to pay on the money it borrows. If the RBA changes the cash rate, banks can then choose to pass this on to their customers.

SEVEN: You’re locked into your lender for the duration of your loan Even if you do end up with a less than ideal home loan package, you can always refinance your mortgage later down the track. Refinancing can help you secure a more competitive home loan rate, or gain access to additional features such as an offset account.

EIGHT: You have to pay to work with a mortgage broker A mortgage broker can help you navigate the complexities of the market and work with banks and lenders to find the right home loan for your needs. A good broker can help you secure a competitive interest rate, and ensure everything goes smoothly throughout the entire home loan process. Many first home buyers mistakenly believe they need to pay for the services of a broker. However, mortgage brokers are paid a commission or fee by lenders and banks. This means that in most cases, you don’t need to pay anything for their services.