A lot can change over the life of a home loan. Families grow up, school fees need to be paid for, renovations need to be done, and sometimes we simply outgrow our home. That is why you should consider a home loan with the flexibility to change if you need change over time. Here are a few things to consider before applying for a home loan.
Decide whether you will go for fixed, variable or both.
In a volatile market, it may be good idea to hedge your bets by splitting your loan-part fixed rate and part variable rate to protect yourself against future interest rate rises. This approach will also see you benefit from a lower rate should variable interest rates decrease.
Make extra repayments.
The way you make repayments can be just as important as a low interest rate. Look for a loan that calculates interest daily and allows you to make extra repayments without penalty. This could help you save money over the life of the loan.
Redraw when you need it.
While it is a good idea to make additional repayments when you can, you need to occasionally access that extra cash. Look for a loan that allows extra lump sum repayments with a redraw facility so you can access your extra repayments if you need to. Choose something with a redraw facility to give you peace of mind in case unexpected expenses arise.
Don’t focus on low interest rates.
Advertised low interest rates are designed to entice the borrower. The real story is in the fees and charges attached to the loan. Review the mortgage comparison rate, as this is an overall percentage figure, calculating the interest rate as well as the fees and charges.
Be clear about your timeframe.
You need to be very clear with your lender about what your timeframe is, as there is a dramatic range of timeframes in which different lenders can approve and finalise your loan. Secure a pre-approved finance to ensure that you are in control and have access to your full choice of lenders.
Don’t hesitate to seek help.
If you don’t know exactly which loan features are right for you, 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. Keep in mind that mortgage brokers deal with lending every day, so they know the tricks of the trade that can mean the difference between your loan being approved or not. They can also assist in preparing and submitting all of the paperwork for you, allowing you more time to focus on the fun parts of property buying.
Make wise decisions when applying for a home loan. Get tips from the top banking & financial services in Australia.