The “best” home loan for a first-time buyer will depend on their individual circumstances, but this will generally depend on the value of the property, the deposit amount, the features of the home loan product and the upfront and ongoing costs.

Home loan experts say buyers, especially those purchasing their first home, often rely on reviews from the lender they’ve always done business with, or focus on the lowest interest rate available on the market. But instead they should focus on the overall cost of the loan, as well as comparing and finding the best lender for their situation.

James Algar, a Sydney-based broker at Mortgage Choice, says using a lender offering First Housing Guarantee Program is a good example of the need to choose a suitable lender.

“It’s really only available through nine or ten different lenders. So only about a third of home lenders let you access a program where you might not have to put down as much of a deposit and still get an amazing deal on your rate,” he says.

“If you go to one of the other (lenders) that are not part of the program, you may end up paying significant mortgage insurance or a much higher interest rate, or both.”

There are a range of additional benefits that first home buyers can access that are not available at all banks, he said. These could include stamp duty waivers, deposit reduction and lender-free mortgage insurance (LMI), among others.

Examples of Home Ownership Loans

A number of lenders, including the big four banks as well as smaller lenders, offer specialist home loans for first home buyers, which generally require a minimum deposit below the industry standard of 20% for owner occupiers , at competitive rates.

Here are some examples:

• Westpac Flexi First Option home loan, with a minimum deposit of 5% and a comparison interest rate of 7.16%.
• NAB base rate home loans, with a minimum deposit of 5% and a comparison rate of 6.99%.
• Commonwealth Bank Extra, with 10% minimum deposit and 6.90% comparison rate.
• ANZ Simplicity Plus, with 10% minimum deposit and 7.24% comparison rate.
• St George Bank Basic Promo, with 5% minimum deposit and 6.70% comparison rate.
• UBank Flex, with minimum deposit of 15% and 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. Those that do include large banks such as NAB and CBA, as well as smaller lenders including Bank Australia, Bendigo Bank, Credit Union SA, IMB Bank and Teachers Mutual Bank, among others.