If you're reading this, I'm earning money. Thanks for helping to feed my family. Please see our disclosure for more information. Also, any advice provided is for informational purposes only. I'm not a CPA, lawyer, or doctor, although my parents wanted me to be all three. So, talk to a professional before acting on anything you read below.
When there are so many lenders and different types of home loans to choose from, it can be overwhelming to find a loan that best fits your specific needs. Taking out a mortgage is a big decision that will impact your finances for years to come. Therefore it’s important to take the time to research, learn about your options and then choose the right home loan to purchase your dream home in Tasmania.
The following expert tips will help you pick a home loan among the many options you discover in your research.
Fixed interest rate: As the name indicates, these home loans have a fixed interest rate for anywhere between one and five years. Such loans allow you to plan your finances as you know upfront the EMIs you’ll be paying over the years. At the same time, fixed rate loans are less flexible. They’re a good option for homebuyers who don’t like the uncertainty that comes with changing interest rates.
Variable interest rate: A variable rate home loan comes with a fluctuating interest rate. This means that the rate of interest is not locked in and may go up or down in accordance with the cash rates of the RBA (Reserve Bank of Australia).
You should choose a variable rate home loan if you’re looking to benefit from a possible low-interest rate in the future. Such loans also have more features, but remember that the interest rate could also increase at times.
Split interest rate: Such type of home loans are divided between the fixed and variable rate of interest. This means that a certain part of your mortgage will have a fixed interest rate and the other part, a fluctuating rate. Spilt loans allow borrowers to take advantage of both types of loans.
Low documentation home loans: Such home loans are a great option for borrowers who do not have sufficient documentation generally required to take out a conventional loan. You should consider this loan if you don’t have documented proof of your income and employment (this may be the case if, for example, you are self-employed). Low doc home loans allow self-employed individuals, new Australian residents and investors to own residential property as they do need to submit proof of income or savings.
Full documentation home loans: These home loans are from lenders that require complete documentation before they will approve your loan. They will typically ask for proof of your income, savings and debts and documentation pertaining to your assets. This loan is good for salaried individuals and professionals.
Although the interest rate, ease of application, amount of deposit required, associated fees and repayment terms are some of the most critical features to consider when choosing a mortgage, there are several other important features that first-time borrowers usually don’t know about.
Before you choose a loan option based solely on low-interest rate or friendly repayment terms, consider the following as well.
If you’re feeling overwhelmed or confused with so many features, seek help from an experienced mortgage broker in your area. Ask to meet the local team to get professional advice on the right financial solution based on the type and location of your preferred property. A well-regarded and experienced local mortgage broker will be able to match you with the best lending companies that offer competitive interest rates and borrower-friendly terms.
Taking out a mortgage involves several different fees which unsuspecting borrowers are often not aware of. To safeguard your interests and avoid stressful surprises, learn about all possible associated fees and charges you may have to incur when taking a home loan. Ask your lender or broker about fees such as establishment fee (or application fee), redraw fees, offset accounting fees, break costs, late payment charges, early exit charges, property valuation charges, lender mortgage insurance (applicable if your deposit is less than 20%), and any bi-annual or annual fees.
Ensure that you know all possible costs beforehand when taking out a loan and buying a home so that you’re well-equipped to handle these additional expenses.
How To Never Pay for In-Game Currencies Again
How Does Bankruptcy Work?
How to Protect High-Voltage Insulators against Contaminants
4 Reasons Why Dads Lose Custody
5 Things You Absolutely Have To Do If You Want More Money
4 Steps To Take If Your Property Isn’t Selling
Useful Ways To Fund Your New Business Startup
Best Ways to Sell with Recurring Payments