Know about Owner Occupied Home Loans before you buy Your Primary Residence

Owner occupied home loans are a type of mortgage that is offered by lenders and credit providers to those people who desire to buy a house and use it as their primary residence. Such loans are offered to home buyers who want to use the property for dwelling and not for investment purposes. Most lenders offer favourable rates on owner occupied home loans because they assume that the owners will take better care of the house than the tenants.

Owner occupied property finance is available for those people who are:

  1. Searching for their first home to live in and want to use it as primary residence
  2. Looking to sell their current home and buy another home to live in and use it as primary residence

Types of properties Lenders consider as acceptable owner occupied real estate security:

  • Free-Standing Residential Detached Homes
  • Semi-Detached Homes
  • Terraced Housing
  • Townhouses
  • Duplex Homes
  • Flats (also called “Home Units”)

Now that you know about the acceptable properties, you can start managing your personal finances and begin the process of obtaining owner occupied home loan.

Your finance broker will prepare a “Home Loan Checklist,” to help you understand your financial limitations and he/she will help you to get a pre-approved home loan. Here is a list of what the finance broker will do. He/she will:

  • Look at your overall financial position including your credit score and prepare a budget for you
  • Use a “Borrowing Power Calculator” to work out – how much you can borrow and how much your repayments might be
  • Work out how much of a deposit you will need to get owner occupied property finance
  • Advise you what documents you have to provide to get a home loan
  • Advise you if Lenders’ Mortgage Insurance (LMI) is payable
  • Advise you what stamp duty and other related fees will incur
  • Confirm if you are a first-time home buyer as you may be eligible for a one-off payment through the governments’ First Home Owner Grant (FHOG) scheme (see firsthome.gov.au)
  • Obtain pre-approval for you, which will put you in a stronger negotiating position with the vendor or real estate agent

An expert finance broker will do all the work for you and make sure that you obtain quick pre-approval. It is important to employ the services of a reputed finance broker because it will save you from all the trouble of finding the finance package for you primary residence.