We already know that conveyancing in Australia is the process of transferring property ownership...Read More →
Buying a home might be the biggest and smartest investment in a person’s life! Owning a place you can turn from a simple house to warm home can change your life!
However, getting that so wanted home is not always easy, even with the different home loans offered today! Getting the home loan itself is a complex process that requires much time and energy!
The first step of the process is choosing a home loan type! This initial step is what people find most confusing! Since there are so many different types of home loans, a decision cannot be made without a good home loan comparison. While making this home loan comparison, the interest rates must always be kept in mind! A lot depends on them so, comparing the mortgage rates is crucial in the decision-making process! By a home loan interest rates compare you can be sure that you are getting the best offer out there!
Before making a home loan interest rate comparison, it is important to be well familiar with the home loan types available to choose from. The most popular home loans types include:
A variable rate home loan is the main loan category in Australia. It is a home loan with a variable rate of interests, which means that the interest rate fluctuates over time usually in line with the official cash rate. Lenders may also make changes to the interest rate independently of the cash rate also.
Depending on the product, a variable rate home loan can be very flexible. Usually borrowers have the option of making repayments weekly, fortnightly or monthly. Additionally some lenders allow people to combine their home loan with another fixed rate loan, splitting the loan.
It is important that you compare mortgage rates with this type of loan, because the interest rate can vary substantially between different lenders, and there can also be different fee structures. It is therefore important to take note of the comparison rate on the loan as this compare like for like.
It is a good idea to compare home loans using a home loan calculator. This can tell you pretty quickly what the major differences are.
If you are worried about the interest rates rising in the future, then the Fixed rate home loan is just the type for you!
If you are looking for security and stability when comparing mortgage rates, then the ‘locked’ rate of the Fixed rate home loan will suit you best! This loan’s interest rates are locked in for a period of one, three or even five years, depending on the home loan provider!
When comparing home loans, it is important to consider if the loan has an offset account attached to it also..
This type of loan links your extra savings to your mortgage. As the name itself suggests, this type of loan allows you to offset your savings, and other money against your home loan. As a result, you pay less interest on your home loan since you are only charged interest on the balance.
If you compare this home loan interest rate with the former, you can easily notice how much money you can save! For instance, if you have a $200,000 mortgage and $20,000 on the offset account, you will only be charged interest on $180,000 each month! And since your monthly repayments are calculated on the original amount, you are paying extra, meaning that you will clear your debt faster.
A redraw facility is where you can pay extra savings you have into your loan now that you can take out later as you require it. It allows you to be flexible when repaying your loan. This is particularly useful if you have savings now that you want to put towards your loan, but you know that have an expense coming up in the future where that cash is required. It is important to compare different redraw facilities and also investigate home loans with an offset account attached, because this might be another option instead of a redraw facility.
A construction loan is a mortgage you take out when you are either building a new home or you are doing a major renovation. Most lenders have construction loans available at slightly more expensive rates of interest, so it is very important to compare interest rates and associated fees across all construction loans to make sure you are getting the best deal.
This is the perfect type of a home loan for people older than 60 who try comparing home loans in order to find something suitable, and fail!
The reverse mortgages were first introduced in Australia more than 10 years ago! They have become especially popular among asset-rich, cash-poor people over 60 who want to remain in their home while still having enough money to live on. Reverse mortgages allow these people to borrow against the equity in their home.
All of these types have different interest rates. And since interest rates are crucial, in order to make the right decision, a thorough home loan interest rate comparison must be made before choosing!
With so many lenders offering so many different products, the home loan market becomes more complex with each passing day. Hence, it is no wonder people are so confused and overwhelmed when making a decision!
One great advice when making a decision on a home loan is using a home loan calculator.
When it comes to buying or refinancing a home, it is always helpful to get an idea of just how much you can afford to repay. In order to understand that, it is good to use a home loan repayment calculator.
Home loan repayment calculators (sometimes referred to as mortgage repayment calculator) are tools that provide an estimate of the maximum you can borrow. This is done by taking into account the monthly income and expenditure and current interest rates. Most of the mortgage repayment calculators also build in a buffer for interest rate rises, so, the numbers you see on the calculator, are most of the time corresponding to the real ones.
Despite being useful, these mortgage repayment calculators are also very easy to use!
Using a reliable home loan calculator is just one of the things that can ultimately help you choose the most suitable home loan. What else you can do? Well…
When you apply for a home loan, you will most certainly need to provide your lender with a number of different financial documents. Having these documents pre-assembled will shorten the application period!
So, do your research and find out what exactly are you expected to bring. Bank accounts, brokerage statements, pay stubs; having before hand them can save you a lot of trouble!
We have mentioned this time and time again! Comparison is the key to making the right decision! Compare the types of home loans and compare home loan rates, find out everything there is to find about the lender, the experiences of fellow-borrowers. A thorough home loan interest rate comparison and lender comparison can make all the difference in the world!
It goes without saying that it is only advisable to borrow as much as you know you can afford to repay. It might seem obvious but many people make a fatal mistake when it comes to this! So, be realistic. Know exactly what you can afford and do not compromise your home by borrowing more than that! Use one of the multiple home loan calculators available on the Internet and see for yourself just how much can you repay!
It is okay to be confused. After all, the home lending market is very confusing! So, if you don’t know exactly which loan features are right for your particular circumstances, be as clear as possible when discussing what you’re trying to achieve, to allow your lender or mortgage broker to help match you to the best loan to meet your needs. These people deal with lending every day, so do not be afraid to talk to them and ask them for help! Most of the time, apart from advising you, they will be more than willing to asset you in preparing and submitting all the paperwork!
Don’t rush into the decision, take your time, do a thorough lender and home loan interest rate comparison, ask around, get your financial documents in order and ask for help if needed! This decision would probably be one of the most important ones in your life, so do not take it lightly!
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