September 21, 2017

5 Important Things that You Need to Know about Your Home Loan

Planning to buy a house anytime soon? It’s an exciting milestone for many Australians. It is also one of the major financial decisions you’ll make, that’s why it is important to understand what buying a house entails.

Home Loan Calculator

A home loan calculator is a useful tool to know how much you need to pay every month. However, keep in mind that a home loan calculator is designed to give estimates, not the actual amounts.

In most cases, people consider getting a home loan, and there are several factors to take into account should you take this route. For instance, it is essential to save money for the deposit. The bigger the deposit, the lower the amount of loan that you need, and the less interest that you’ll pay throughout the loan term.

Here are other important things that you need to know about home loans:

  1. Fixed loan vs. variable loan. There are two types of home loans. The fixed loan has a fixed interest rate for a certain period, while a variable loan comes with an interest rate that changes depending on market rates. In this case, your repayments will also vary.
  2. Compare home loans. Financial institutions offer a wide range of home loans to cater to people’s varying requirements. Look around and compare home loan rates from different institutions to make the selection process easier. A comparison rate is a good way to compare home loan interest rates.
  3. Check the fees. Aside from the interest rate, it is important to know the fees included in your home loan, whether upfront or ongoing fees, as these can easily increase your repayments. Also, esquire if there are charges for incidents such as late payments or cancelling your home loan.
  4. Know the amount of repayments. A home loan calculator is a useful tool to know how much you need to pay every month. Bear in mind, however, that it should serve only as a reference. There are several factors to consider when it comes to getting home loans, and a home loan calculator is designed to give mortgage estimates, not the actual amounts.
  5. Check the home loan key facts sheet. Financial institutions that offer home loans will have a home loan facts sheet available upon request. It will include important details such repayments, fees, interest rates, and other charges. It makes it easier to compare homes across different lenders.

As with any other important document, make sure to read and understand the terms and conditions before signing any contract for your home loan. Clarify terms with the financial institution to avoid having to deal with unpleasant surprises later on.

Got other ideas on home loan comparison and how to compare home loan rates? Share your insights in the comments section.

About the author  ⁄ Marxa Dillan

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