Unlock the secrets to variable rate loan fees & costs

As a landscaper looking to buy your first home, understanding variable rate loan fees and costs is crucial for making informed financial decisions. Variable interest rate loans offer flexibility that many first time home buyers find appealing, but knowing what you'll pay upfront and ongoing is essential for budgeting effectively.

Understanding Variable Interest Rates

Variable interest rates move up and down with market conditions, which means your repayments can change over time. Unlike fixed interest rate loans where your rate stays the same for a set period, variable rates give you access to potential savings when rates drop, plus additional features like offset accounts.

For landscapers with seasonal income variations, variable rates can work well because many lenders offer features that help manage cash flow fluctuations throughout the year.

Upfront Costs You'll Need to Consider

When applying for a home loan, several upfront costs come into play:

• Application fees: Some lenders charge between $300-$600 for processing your loan application
• Valuation fees: Banks need to value your property, typically costing $200-$500
• Lenders mortgage insurance (LMI): Required when your loan to value ratio (LVR) exceeds 80%, this can range from thousands to tens of thousands of dollars
• Stamp duty: A state government charge that varies by location and property value
• Legal and conveyancing fees: Usually between $1,500-$3,000 for property transfer costs
• Building and pest inspections: Around $400-$800 to ensure your property is structurally sound

Ongoing Fees to Factor In

Beyond the initial costs, variable rate loans come with ongoing expenses:

• Monthly or annual package fees: Some loan packages charge $150-$400 annually
• Offset account fees: While many variable loans include this feature, some charge $10-$20 monthly
• Redraw facility fees: Accessing extra repayments might cost $5-$20 per transaction
• Direct debit dishonour fees: Failed payments can result in $15-$35 charges

How First Time Home Buyer Programs Can Help

Several first time home buyer schemes can reduce your costs significantly:

First Home Owner Grants (FHOG): State governments provide grants typically ranging from $10,000-$25,000 for eligible first home buyers.

Home Guarantee Scheme: This federal program allows eligible buyers to purchase with as little as 5% deposit without paying lenders mortgage insurance (LMI), potentially saving thousands.

First time home buyer programs: Many states offer stamp duty concessions or exemptions for first home buyers, which can save substantial amounts depending on your property's value.

Calculating Your Borrowing Capacity

As a landscaper, your borrowing capacity depends on several factors:

• Income documentation: Banks statements and tax returns showing consistent earnings
• Seasonal income patterns: Lenders who understand the trades industry can better assess your financial situation
• Existing debts and expenses: Credit cards, personal loans, and living costs all impact how much you can borrow
• Deposit size: A larger deposit improves your loan amount options and may secure interest rate discounts

Getting Pre-Approved for Your First Home Loan

Before you start property hunting, getting pre-approved gives you confidence about your loan amount and streamlines the buying process. The application process typically involves:

1. Gathering documents: Recent payslips, bank statements, tax returns, and asset/liability statements
2. Completing the application: Many lenders now offer a streamlined application process
3. Credit assessment: Lenders review your credit history and financial situation
4. Pre-approval certificate: Valid for 3-6 months, showing sellers you're a serious buyer

Choosing Between Variable and Fixed Rates

While this article focuses on variable rates, it's worth understanding your options. Variable interest rates offer:

• Flexibility: Make extra repayments without penalties
• Additional features: Offset accounts, redraw facilities, and split loan options
• Rate benefits: Access interest rate discounts and rate reductions when they occur

Fixed rates provide payment certainty but typically offer fewer features and flexibility.

Access to Diverse Lending Options

Working with a mortgage broker gives you access to home loan options from banks and lenders across Australia. This broad access means:

• Comparing packages: Different lenders offer varying fee structures and benefits
• Specialist lender access: Some lenders specialise in trades industry lending
• Investment loan options: If you're considering your first investment property down the track
• Ongoing support: Help throughout the property market journey

Making Your Decision

Buying your first home as a landscaper involves understanding all associated costs, not just the interest rate. Consider your cash flow patterns, future plans, and how different loan features align with your needs.

Remember that the lowest rate isn't always the cheapest option when fees are included. Calculate the total cost over your intended loan term, factoring in both ongoing costs and upfront expenses.

Choosing the right variable rate loan with appropriate features can support your journey from first home buyer to potential property investor, giving you flexibility as your financial situation grows.

Ready to explore your home loan options? Call one of our team or book an appointment at a time that works for you. We specialise in helping tradespeople like landscapers access home loan options from banks and lenders nationwide, ensuring you get a loan package that suits your unique circumstances.