Everything You Need to Know About Buying Your First Unit

Understanding Unit Purchases for First Home Buyers

For teachers considering buying your first home, purchasing a unit can be an excellent entry point into the property market. Units typically require a smaller deposit and offer more affordable options compared to houses, making them particularly attractive for educators starting their homeownership journey.

When applying for a home loan for a unit purchase, your financial situation will be assessed differently than other property types. Lenders consider factors such as the building's structural integrity, strata management, and location when determining your borrowing capacity.

First Time Home Buyer Programs and Benefits

As a first-time buyer, you can access several government initiatives designed to support your purchase:

• Home Guarantee Scheme: This program allows eligible buyers to purchase with as little as 5% deposit without paying lenders mortgage insurance (LMI)
• First home owner grants (FHOG): State-based grants providing financial assistance for qualifying purchases
• First time home buyer schemes: Various state programs offering stamp duty concessions or exemptions
• First time home buyer programs: Additional support packages depending on your location

These benefits can significantly reduce the upfront costs associated with your unit purchase, making homeownership more accessible on a teacher's salary.

Financing Options and Loan Structures

Teacher Loans provides access to home loan options from banks and lenders across Australia, ensuring you receive suitable financing for your unit purchase. Key considerations include:

Interest Rate Options:
• Variable interest rate: Fluctuates with market conditions
• Fixed interest rate: Locked rate for a specified period
• Split loans: Combination of variable and fixed portions

Loan Features to Consider:
• Offset account: Links your savings to reduce interest charges
• Interest rate discounts: Professional packages often available for teachers
• Flexible repayment options: Suited to teaching salary structures

Understanding Loan to Value Ratio and LMI

The loan to value ratio (LVR) represents the loan amount as a percentage of the property's value. For units, lenders often have specific LVR requirements due to perceived higher risks. Generally:

• LVR above 80% typically requires lenders mortgage insurance (LMI)
• Some lenders cap LVR for units at 90% or 95%
• Inner-city units may have different LVR restrictions

Understanding these parameters helps you determine the deposit required and associated costs for your unit purchase.

The Application Process

The streamlined application process for your first home loan involves several stages:

1. Pre-approval: Get pre-approved to understand your borrowing capacity
2. Documentation: Prepare bank statements, payslips, and employment verification
3. Property selection: Choose a unit meeting lender criteria
4. Formal application: Submit comprehensive loan application
5. Valuation and approval: Lender assesses property and finalises approval
6. Settlement: Complete the purchase process

Having access to banks and lenders nationwide through Teacher Loans means you can compare packages and find suitable terms for your circumstances.

Specific Considerations for Unit Purchases

When buying a unit, additional factors require attention:

Strata Reports: Review building maintenance, financial records, and planned improvements that could affect ongoing costs.

Building Insurance: Ensure comprehensive coverage through strata insurance and consider contents insurance for your personal belongings.

Ongoing Costs: Factor in strata levies, council rates, and maintenance costs when calculating affordability.

Rental Potential: Even as your primary residence, consider future rental potential should your circumstances change.

Investment Opportunities

Many teachers eventually consider investment loan options after purchasing their first home. Units can serve as stepping stones, potentially becoming your first investment property when you upgrade to a house. Understanding the investment loan application process early can inform your initial purchase decision.

Accessing professional advice ensures you make informed decisions about your property purchase. Teacher Loans specialises in understanding educators' unique financial circumstances and can help structure loans that accommodate teaching schedules and salary arrangements.

Purchasing your first unit represents a significant milestone in building long-term wealth. With appropriate financing, government support, and professional guidance, homeownership becomes achievable for teachers across Australia.

Call one of our team or book an appointment at a time that works for you to discuss your unit purchase options and explore suitable home loan packages tailored to your teaching career.