With so many different home loans to choose from, not just from different vendors but also the different terms and packages each lender offers, it’s easy to get lost and overwhelmed.
It’s also easy to get trapped into home loan terms that aren’t in your best interest. Not all home loans are created equal. Be sure to go home loan shopping armed with information.
BUY WITHIN YOUR BUDGET
While interest-only repayments for the first year of your loan may sound attractive, especially if you are looking to recover from that down payment and get some savings back into your bank account, it’s only a short-term fix that will most likely cost a lot more in the long run.
Interest-only repayments usually come with a higher interest rate, and delaying payments on your loan means your loan will stretch further into your future. Depending on how many additional weeks, months or years your repayments take, it can end up costing significantly more.
Buy a home when you can make a comfortable down payment and easily afford the principal and interest repayments from day one.
LET YOUR LENDER KNOW IF YOU MOVE IN
If you buy a property with the intention of renting it out, the loan repayment rate is significantly higher in most cases.
Some homeowners choose to rent out their property for a few years initially to help cover the mortgage, while others have a change in their personal circumstances and decide to move into their investment property for good.
When you move in as the owner-occupier be sure to let your lender know and provide evidence so that your loan can be adjusted to the normal, lower rate.
GO BIG ON THE DEPOSIT
Paying a large cash deposit upfront not only takes a large chunk out of your loan and reduces your loan duration, it also gives you access to lower repayment rates.
Bigger pricing discounts come into play with most home loan lenders if you can pay a deposit of 25% or more.
MAKE EARLY REPAYMENTS
Regularly pay into your loan account before the due date and make additional repayments whenever you can afford it, make it your Christmas gift to yourself to get your loan paid as fast as possible!
The big cost with a mortgage is the interest rate. The more you do to make your repayments early, the less interest you will have to pay, which means you own your home faster.
GET A GREAT LENDER
The mortgage professional you choose needs to be a great one. The contract you sign with your lender is going to last for a long time. Until you make the full payment, your home and financial security depend on them being honest, respectable and able to communicate with you clearly.
A mortgage professional with experience will know the ropes and the low down on the lenders. As well as gaining security of a trusted and reliable lender, you can also tap into additional interest rate discounts, superior loan structure and priority processing.
The right mortgage professional will minimise costs by establishing your loan and monitoring your progress, adjusting for changes in your life to ensure you are getting the best results and not paying too much for your home loan.
It’s worth doing your homework and shopping around for the mortgage professional team and home loan that works for you. After all, this is your life you’re are investing in, you want to make sure you get the very best from it.
Peta Stewart – Certified Practicing Conveyancer