Proven tips to secure variable rate loans for first home buyers

Understanding Variable Rate Home Loans for Self-Employed First Home Buyers

As a self-employed Victorian looking to purchase your first property, understanding variable interest rate loans can make a significant difference to your financial situation. Unlike fixed interest rates that remain constant, variable rates fluctuate with market conditions, offering both opportunities and considerations for first-time buyers.

Variable rates typically start lower than fixed rates, which can mean reduced monthly repayments during the initial period of your loan. However, they can also increase, potentially affecting your borrowing capacity over time. For self-employed individuals, this flexibility can work in your favour, especially when your income varies seasonally or annually.

Key Benefits of Variable Rate Loans

Variable rate loans offer several advantages that align well with the needs of first home buyers:

• Offset account availability: Most variable rate packages include offset accounts, allowing you to reduce interest payments by parking savings against your loan amount

• Interest rate discounts: Lenders often provide better discount packages on variable rates, particularly for owner-occupiers

• Flexible repayment options: You can typically make extra repayments without penalties, helping you pay down your loan faster

• Access to redraw facilities: Withdraw extra payments you've made when needed, providing financial flexibility

At Archbold Financial, we help self-employed clients access Home Loan options from banks and lenders across Australia, ensuring you find the right variable rate package for your circumstances.

First Home Buyer Support Programs

Victorian first-time buyers have access to various government initiatives that work well with variable rate loans:

Home Guarantee Scheme: This federal program allows eligible first home buyers to purchase with as little as 5% deposit, avoiding lenders mortgage insurance (LMI). The scheme works with variable rate loans and can significantly reduce your upfront costs.

First Home Owner Grants (FHOG): Victorian first home buyers can receive up to $10,000 for new homes or $25,000 for regional purchases. These grants can be applied directly to your deposit, improving your loan to value ratio (LVR).

Stamp Duty Concessions: Victoria offers stamp duty exemptions for first home buyers purchasing properties under $600,000, with partial concessions up to $750,000.

Application Process for Self-Employed Borrowers

Applying for a home loan as a self-employed borrower requires additional documentation, but the process doesn't have to be overwhelming. Here's what you'll typically need:

1. Two years of tax returns and notices of assessment
2. Bank statements covering 3-6 months
3. BAS statements if you're registered for GST
4. Accountant's letter confirming income
5. Proof of deposit savings

The streamlined application process varies between lenders, with some more accommodating to self-employed applicants than others. Having access to banks and lenders nationwide through a mortgage broker means you're not limited to mainstream options that might not suit your situation.

For those considering their first investment property after purchasing their home, establishing a solid relationship with lenders through your first Home Loan can open doors for future investment loan options.

Managing Variable Rate Fluctuations

While variable rates can change, there are strategies to manage this uncertainty:

Build a buffer: Calculate repayments at a higher interest rate to ensure you can handle increases. Most lenders assess your borrowing capacity at rates 2-3% higher than current rates.

Use offset accounts effectively: Park your savings, including emergency funds, in your offset account to reduce interest charges while maintaining access to funds.

Consider partial fixing: Some borrowers split their loan, keeping part variable while fixing a portion, balancing flexibility with rate certainty.

Regular reviews: The property market and your financial circumstances change over time. Regular loan health checks can identify opportunities for refinancing to better rates or features.

Getting Started with Your First Home Purchase

Before you start property hunting, getting pre-approved gives you confidence in your borrowing capacity and demonstrates to vendors that you're a serious buyer. Pre-approval also locks in current interest rate offers for a specified period, protecting you from potential rate increases during your search.

The key to success lies in understanding your options and working with professionals who specialise in first home buyers and self-employed lending. Every lender has different policies regarding self-employed income assessment, and knowing which ones align with your situation can save time and improve your chances of approval.

Variable rate loans offer flexibility and potential savings for first home buyers, particularly when combined with government incentives and proper financial planning. With the right guidance, self-employed Victorians can successfully enter the property market and build long-term wealth through homeownership.

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