As a Defence Force member, your property search journey comes with unique considerations that civilian buyers rarely face. Understanding how to approach your search strategically can make the difference between finding a property that works for your military lifestyle and one that becomes a burden during your service career.
Understanding Your Borrowing Capacity Before You Start
Before diving into property inspections, it's crucial to understand your financial situation and borrowing capacity. Defence members often have stable income streams, which lenders view favourably, but your posting history and potential for relocation can impact loan applications.
Getting pre-approved for your first home loan gives you clarity on your loan amount and helps you focus your search within realistic price ranges. This process involves:
• Reviewing your bank statements and financial records
• Assessing your current income and employment stability
• Determining your loan to value ratio (LVR) requirements
• Understanding any lenders mortgage insurance (LMI) obligations
Location Strategy for Military Life
Your property search strategy needs to account for the realities of Defence life. Consider these location factors:
Proximity to Defence Bases: While you might not stay at your current posting forever, properties near major Defence installations often maintain steady rental demand from other service members.
Transport Links: Look for areas with reliable public transport or major road access. This becomes important whether you're commuting to base or need to relocate quickly for new postings.
Rental Potential: Even if you're buying your first home to live in initially, consider how it might perform as an investment property later. Areas with good schools, shopping centres, and employment opportunities typically attract quality tenants.
Maximising First Home Buyer Benefits
Defence members can access various first time home buyer programs and schemes that reduce the financial burden of purchasing property:
First Home Owner Grants (FHOG): Each state offers different grant amounts and eligibility criteria. Research what's available in your target purchase area.
Home Guarantee Scheme: This government initiative can help eligible first-time buyers purchase with smaller deposits, potentially avoiding LMI costs.
Stamp Duty Concessions: Many states offer reduced stamp duty for first home buyers, which can save thousands of dollars on your purchase.
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Defence Loans today.
Working with Multiple Lenders
Having access to home loan options from banks and lenders across Australia gives you more opportunities to secure favourable terms. Different lenders offer varying:
• Interest rate discounts for Defence members
• Loan packages with offset accounts and other features
• Varying LVR requirements and LMI policies
• Different approaches to assessing military income
Some lenders have specific programs recognising the stability of Defence employment, which can result in more favourable lending terms.
Interest Rate Considerations
When applying for a home loan, you'll need to choose between variable interest rate and fixed interest rate options. Consider:
Variable Rates: These fluctuate with market conditions but often start lower and may include offset account options that can reduce interest over time.
Fixed Rates: Provide payment certainty for a set period, which can help with budgeting during your early homeownership years.
Many Defence members benefit from splitting their loan between fixed and variable portions to balance security with flexibility.
Preparing Your Application Process
The application process for Defence members involves some unique considerations:
• Gather documentation showing stable military employment
• Prepare bank statements covering your required assessment period
• Consider how frequent relocations might be viewed by lenders
• Ensure you understand the full loan terms and conditions
Having access to banks and lenders nationwide becomes particularly valuable when you're posted to different states, as it ensures continuity in your banking relationships.
Planning for Future Investment Opportunities
Many Defence members eventually consider investment loan options as their careers progress. Your first home purchase can be the foundation for building wealth through property investment.
When choosing your first property, consider how it might fit into a broader investment strategy. Areas with strong rental demand and capital growth potential can serve you well if you later convert your home into your first investment property.
Your property search strategy should balance immediate needs with long-term goals. By understanding the full range of loan products available and how they apply to your unique circumstances as a Defence member, you can make informed decisions that support both your current lifestyle and future financial objectives.
Call one of our team or book an appointment at a time that works for you to discuss how we can help you access the right loan products for your property search and purchase goals.
