The ‘best’ home loan for a first home buyer will depend on their individual circumstances, but will generally depend on the value of the property, deposit size, features of the home loan product and upfront and ongoing costs.

Mortgage experts say buyers, especially those buying their first home, often always rely on feedback from their lender or focus on the lowest interest rate on the market. But instead, they should focus on the overall cost of the loan and compare and find the lender that best suits their circumstances.

Sydney-based broker James Algar, who owns Mortgage Choice, says using a lender offers the following: First Home Warranty Program It is a good example of the need to choose a suitable lender.

“It’s really only available through nine or 10 different lenders. So only a third of home loan lenders allow you to access a scheme where you won’t have to put down a huge deposit and still get an incredible discount on your interest rate,” he says.

“If you go to another (lenders) that are not part of the plan, you may have to pay a lot of mortgage insurance, a much higher interest rate, or both.”

He said there were a number of additional benefits available to first home buyers that were not available at every different bank. These may include stamp duty exemptions, reduced deposits and lender-free mortgage insurance (LMI), among others.

Examples of First Home Buyer Loans

A number of lenders, including the Big Four banks as well as smaller lenders, offer private home loans for first home buyers, often requiring a minimum deposit of less than the industry standard of 20% for owner-occupiers at competitive rates.

Some examples include:

• Westpac Flexi First Option Home loan with minimum deposit of 5% and benchmark interest rate of 7.16%.
• NAB Base Rate Home loans, minimum deposit 5% and comparison rate 6.99%.
• Commonwealth Bank Extra with a minimum deposit of 10% and a comparison rate of 6.90%.
• ANZ Simplicity Plus with a 10% minimum deposit and a 7.24% comparison rate.
• St George Bank Basic Promotion with minimum deposit of 5% and comparison rate of 6.70%.
• UBank Flex with a minimum deposit of 15% and a comparison rate of 6.88%.
• Loans.com.au Basic Home loan with 10% minimum deposit and 6.06% comparison rate

Not all lenders offer the government’s First Home Guarantee scheme. These include major banks such as NAB and CBA, as well as smaller lenders such as Bank Australia, Bendigo Bank, Credit Union SA, IMB Bank and Teachers Mutual Bank.