First Home Buyer's Guide to Variable Rate Loan Fees & Costs

Understanding Variable Interest Rate Loans for First Home Buyers

As a Queensland Ambulance Service employee taking your first steps towards buying your first home, understanding the fees and costs associated with variable interest rate loans is essential to managing your first home buyer budget. Variable interest rate loans offer flexibility that can work well for many first home buyers, but it's important to know what you're paying for.

A variable interest rate means your loan's interest rate can move up or down based on market conditions and lender decisions. Unlike a fixed interest rate that remains constant for a set period, variable rates adjust over time, which affects your regular repayments.

Key Fees and Costs to Consider

When you apply for a home loan with a variable interest rate, you'll encounter several fees and costs. Understanding these upfront helps you prepare your first home buyer checklist and avoid surprises during the home loan application process.

Application and Establishment Fees

Most lenders charge an application fee when you submit your first home loan application. This typically ranges from $250 to $600, though some lenders waive this fee. The establishment fee, which covers the administrative costs of setting up your loan, can range from $0 to $1,000.

Lenders Mortgage Insurance (LMI)

If you're borrowing more than 80% of the property's value, you'll likely need to pay Lenders Mortgage Insurance (LMI). For Queensland Ambulance Service employees, there's positive news - many lenders offer LMI waivers for paramedics, which can save you thousands of dollars. This benefit often applies to low deposit loans for paramedics, including 5% deposit and 10% deposit options.

Ongoing Account Fees

Variable rate loans often come with monthly or annual account-keeping fees, typically ranging from $10 to $30 per month. Some lenders offer fee-free accounts, so it's worth comparing home loan options during your research.

Features That Add Value to Variable Rate Loans

Offset Account Benefits

Many variable rate loans include an offset account option, which can significantly reduce the interest you pay over the life of your loan. An offset account is a transaction account linked to your home loan - the balance in this account is offset against your loan balance, reducing the interest charged.

For example, if you have a $400,000 loan and $20,000 in your offset account, you'll only pay interest on $380,000. This feature is particularly valuable for Queensland Ambulance Service employees who receive regular income and can maintain savings.

Redraw Facility

A redraw facility allows you to access any extra repayments you've made on your loan. If you pay more than your minimum repayment, these additional funds aren't lost - you can redraw them if needed. Some lenders charge a fee for redraw transactions, while others offer unlimited free redraws.

Government Support for First Home Buyers

As a first home buyer, you may be eligible for several government schemes that can reduce your upfront costs:

First Home Owner Grants (FHOG)

Queensland offers first home owner grants for eligible buyers purchasing or building a new home. Currently, the FHOG provides $15,000 for new homes valued up to $750,000.

First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme allows eligible first home buyers to purchase a property with as little as a 5% deposit without paying LMI. The Regional First Home Buyer Guarantee extends similar benefits to those purchasing in regional areas.

Stamp Duty Concessions

Queensland first home buyers may qualify for first home buyer stamp duty concessions, which can save thousands of dollars. First home buyer eligibility criteria apply, including property value limits and residency requirements.

First Home Super Saver Scheme

The first home super saver scheme allows you to save for your deposit inside your superannuation fund, potentially benefiting from tax advantages.

Managing Interest Rate Changes

With a variable interest rate, your repayments can change when the interest rate moves. Here's how to manage this:

1. Build a buffer: Maintain savings that could cover several months of repayments if rates increase
2. Make extra repayments: When rates are lower, pay more than the minimum to reduce your principal faster
3. Monitor rate movements: Stay informed about interest rate changes and how they affect your budget
4. Consider rate discounts: Many lenders offer interest rate discounts for professionals, including Queensland Ambulance Service employees

Additional Costs When Buying Your First Home

Beyond your home loan fees, remember to budget for:

• Conveyancing and legal fees ($1,200 to $2,500)
• Building and pest inspections ($400 to $800)
• Valuation fees ($200 to $400)
• Removalist costs
• Connection fees for utilities
• Council rates and strata fees (if applicable)

Using Gift Deposits

If you're receiving a gift deposit from family members to help with your deposit, most lenders accept this as genuine savings. You'll need a statutory declaration from the gift provider confirming the funds don't need to be repaid.

The Importance of Pre-Approval

Before you start house hunting, getting loan pre-approval gives you clarity on your borrowing capacity and shows sellers you're a serious buyer. The pre-approval process involves submitting your home loan application and supporting documents for assessment. Pre-approval typically lasts 90 days and helps you shop with confidence within your first home buyer budget.

Comparing Variable Rate Loan Options

When comparing home loan options, look beyond the interest rate. Consider:

• Annual fees and charges
• Availability of an offset account
• Redraw facility terms
• Flexibility to make extra repayments
• Interest rate discounts available to Queensland Ambulance Service employees
• Customer service and support quality

Working with Specialist Brokers

As a Queensland Ambulance Service employee, working with brokers who understand the specific benefits available to paramedics and ambulance workers can be valuable. Specialist knowledge of home loans for Queensland Ambulance Service employees means accessing lender policies that offer preferential terms, including LMI waivers and interest rate discounts.

Your first home loan application represents a significant financial commitment. Taking time to understand variable rate loan fees and costs, exploring first home buyer grants, and ensuring you meet first home buyer eligibility requirements will position you well for this important purchase.

The right variable rate loan should align with your financial situation, career progression, and long-term goals. With proper planning and the right support, buying your first home as a Queensland Ambulance Service employee is an achievable goal.

Call one of our team or book an appointment at a time that works for you to discuss your home loan options and create a tailored plan for your first home purchase.