Top Tips for Taking Out a Home Loan
Most people chose to buy homes through bank finance since saving to buy a home may be a difficult task. Read the extract below to understand the various considerations to make taking out a mortgage.
Engage a Mortgage Broker
A mortgage broker is an individual that sells home loans on behalf of banks and mortgage companies. Your choice of mortgage broker should be independent and not affiliated with any financial institution. As such, you are certain that you will receive unbiased advice regarding the various loan products. An experienced mortgage broker will organise your documents and ensure that the bank pays the seller once you sign the contract of sale. Your mortgage broker will also negotiate interest rates and repayment terms with your bank.
Types of Home Loans
The type of home loan you take is determined by your current financial situation and the property you intend to purchase. Below are several types of home loans available in Australia;
- If you have a low credit score, consider a discharged bankrupt, tax debt, or debt consolidation home loan.
- If you plan to purchase a new home before selling your current house, bridging finance is your best bet.
- A construction loan is best suited for people that intend to build their homes.
- Go for a line of credit loan if you intend to conduct some return on investment projects on your property.
- A variable rate loan has a fluctuating interest rate determined by the prevailing cash rate set by the Reserve Bank of Australia. A fixed-rate loan has a fixed interest rate.
Repayments
Taking out a home loan is easy if you have a good credit score and the right documents. However, you must ask yourself if you can make the monthly repayments. Talk with your spouse and rearrange your finances. Ensure that you have adequate funds for basic home needs such as food and your children's education. Besides, you should save some money for a rainy day. A home loan with longer repayment terms and low monthly repayment rates is best suited if you have a low income.
Terms and Conditions
Inquire about the loan's terms and conditions. For instance, how much deposit is required? The more the deposit, the lower the monthly repayments. What would happen if you are late to make a repayment? Avoid lenders that impose unrealistic penalties on buyers. Can you restructure the loan? It is a suitable option if your financial conditions change.
Home loans are an easy way to purchase your dream home. Engage a mortgage broker to negotiate interest and repayment terms on your behalf.