Choosing the Right Home Loan can be a long and complex process, especially as the lending industry becomes more competitive. Home loans are available in a range of variations and differ throughout lenders. Read on for a simplified process on how to choose the right home loan for you and your family.
There are three basic types of home loans available:
Each of these home loan types come with interest only or principal and interest (P&I) repayment methods.
The features offered by each lender differ and there is an extensive range of variations that can be altered to suit your individual needs. This is why it’s best to sit down one on one and discuss what works best for you.
Generally speaking, interest only will be for a short period (perhaps a few years) at the beginning of your mortgage, so you can get used to the repayments and ease into the concept and flow of paying for a mortgage. Principal is the cost of the mortgage itself.
There are many factors to consider when choosing the best home loan for you. It’s important to consider the entire package being offered, not focus on one area. If the loan has an extremely low interest rate, the chances are the fee structure is high.
To put the concept of fee structure into perspective, you may choose to pay interest only for a few years and you are essentially locked into doing so until you decide to change the structure of your loan (upon agreement with your lender) to pay the principal as well. This may incur a fee, which in this instance if your interest is very low, may be very high.
Therefore it is imperative to consider all aspects of your home loan and ensure you are getting the best deal you can.
In another case, if there are a lot of features attached to the loan, for example a no change fee, you may be stung with higher interest rates.
“Depending on whether you’re a first homebuyer, second homebuyer, are self-employed or thinking about renovating, refinancing or investing, your loan needs to accommodate your individual circumstances. If you’re buying your first home, your loan needs to be easily manageable, especially in your first year. Home loans have many different features, and it’s important not to judge a home loan solely on the interest rate and upfront establishment fees.” Via www.yourmortgage.com.au
What to look for in your first mortage…
- The ability to make additional repayments to your loan without extra charges
- The ability to make repayments via direct debit, ATMs, Internet and phone banking services
- 100% mortgage offset facility
- The ability to redraw funds at any time
- Home loan fees
- Can you restructure the loan further down the track?
Thanks to ANZ
The concept of choosing the right home loan is very complex, so take a look at the following websites to gain a better understanding of what will work for you.
If you are looking at building your own home, contact Aussie Living Homes today as there are an abundance of homes that will suit your individual needs, in addition to a range of friendly representatives that will guide you in the right direction.
Aussie Living Homes have in-house finance experts that will take care of all of your financial queries and help with government grants for first home buyers. They make it simple to understand the building process and achieve the best result possible.