Making the Move to Be Near Family
There's something special about living close to family. Whether it's having grandparents nearby to help with the kids, being able to support ageing parents, or simply enjoying regular Sunday dinners together, proximity to loved ones can significantly improve your quality of life.
For many first home buyers in NSW, the desire to buy a home closer to family is a driving factor in their property search. However, this often means purchasing in established areas where property prices can be higher. Understanding your home loan options and how to improve borrowing capacity can make this dream achievable.
Understanding Your Home Loan Options
When you're looking to achieve home ownership near family, it's important to explore all available home loan products and understand which features align with your situation.
Interest Rate Options:
- Variable rate: Your interest rate changes with market conditions, potentially offering lower repayments when rates decrease
- Fixed rate: Lock in your home loan interest rate for a set period, providing certainty with your repayments
- Split rate: Combine both variable and fixed portions in your split loan to balance flexibility and stability
Each option has distinct home loan features and benefits. A variable interest rate home loan typically offers more flexibility with features like an offset account, while a fixed interest rate home loan provides predictable repayments that can help with budgeting.
Home Loan Features That Can Help
Certain home loan features can significantly impact your ability to build equity and save money:
Offset Account: A linked offset account allows your savings to reduce the interest charged on your loan amount, helping you pay off your owner occupied home loan faster.
Portable Loan: If you think you might move again in the future, a portable loan lets you transfer your existing home loan to a new property without reapplying.
Redraw Facility: Make extra repayments and access them later if needed, giving you financial flexibility while building equity faster.
Calculating Home Loan Repayments
Before you start house hunting near family, understanding calculating home loan repayments helps you determine what you can afford. Your repayments depend on:
- The loan amount you borrow
- The interest rate (fixed or variable)
- The loan term (typically 25-30 years)
- Whether you choose principal and interest or interest only repayments
Principal and interest repayments help you build equity from day one, while interest only repayments might offer lower initial payments but don't reduce your loan balance.
Managing Lenders Mortgage Insurance (LMI)
If you don't have a 20% deposit saved, you'll typically need to pay Lenders Mortgage Insurance (LMI). This protects the lender if you can't make repayments. Your loan to value ratio (LVR) determines whether LMI applies.
However, first home buyers in NSW have several options to reduce or avoid LMI:
- The 5% Deposit Scheme allows eligible buyers to purchase with just a 5% deposit without paying LMI
- Guarantor loans where a family member uses their property equity to guarantee part of your loan
- Certain LMI waivers available through specific lenders for professionals
First Home Buyer Support in NSW
As a first home buyer in NSW, you may be eligible for various government schemes that can help you buy closer to family sooner:
First Home Owner Grants provide financial assistance for purchasing or building your first home. The Home Guarantee Scheme offers multiple pathways including options for single parents through the 2% Deposit Scheme for Single Parents.
You might also consider the First Home Super Saver Scheme, which allows you to save for your deposit within your superannuation fund, potentially with tax benefits.
Getting Your Home Loan Application Ready
When you're ready to apply for a home loan, preparation is key:
1. Check Your Borrowing Capacity: Understanding your borrowing capacity helps you know your price range. This considers your income, expenses, existing debts, and the loan to value ratio.
2. Compare Rates: Access home loan options from banks and lenders across Australia through a broker. Compare home loan rates, not just the advertised rate, but also the comparison rate which includes fees.
3. Seek Home Loan Pre-approval: Getting pre-approval shows sellers you're a serious buyer and gives you confidence about your budget when searching for properties near family.
4. Review Home Loan Packages: Look beyond just current home loan rates. Consider the entire package including interest rate discounts, rate discount periods, annual fees, and ongoing home loan features.
Why Location Near Family Adds Value
Buying a home closer to family isn't just an emotional decision - it can provide genuine financial stability and practical benefits:
- Reduced childcare costs with family support nearby
- Ability to share resources and reduce living expenses
- Built-in support network that can help during financial challenges
- Potential to secure your future by being established in a familiar area
These factors contribute to your overall financial wellbeing and can even help you maintain your home loan repayments during challenging times.
Working with a Finance Broker
A finance broking business like FHOG can help you access home loan options from banks and lenders across Australia, compare rates effectively, and find home loan packages suited to your situation. We understand the NSW property market and the specific needs of first home buyers looking to invest in property near their support networks.
We can help you:
- Find variable home loan rates and fixed options with competitive interest rate discounts
- Identify lenders offering the lowest rates for your circumstances
- Structure your loan to need lower repayments if that suits your budget
- Understand complex features like how a mortgage offset works
- Navigate government schemes available to first home buyers
Buying a home closer to family in NSW is an investment in both property and your quality of life. With the right home loan structure, understanding of available schemes, and professional guidance, you can turn this goal into reality.
Call one of our team or book an appointment at a time that works for you to discuss your options for buying a home near your loved ones.