Finding a home loan that matches your needs could save you many thousands of dollars in interest payments over the term of your mortgage.
With so many loan products now on the market you can be sure there’s at least one that fits the bill for you. Here are a few tips to keep in mind in your search for a suitable mortgage.
What type of purchaser are you?
Your personal situation will determine what mortgage suits your needs, as well as what type of products are actually available to you. Are you a first time buyer, for instance, or are you refinancing an existing debt? Perhaps you’re looking for solid capital growth in an investment property or the home you’ll spend the rest of your life in?
It’s important to consider why you’re buying and finding a mortgage that complements that.
What’s my borrowing capacity?
Lenders will decide how much they are willing to lend to you based on a number of factors; however, that doesn’t mean you should take the maximum amount they offer. Closely check your finances to determine what you can afford to spend.
Be honest and work out a realistic budget, factoring in all regular commitments, such as school fees, car payments, and food, as well as all those entertainment expenses. What’s left can be channeled into any mortgage repayments.
Do your home loan research
Speak with your mortgage broker – they’re in a great position to help you compare different loans and lenders to see how they suit your circumstances.
Decide what home loan features you require to meet your objectives, for example are you looking for flexibility to pay off your mortgage quickly? – and then go in search for a suitable deal.
Some of the most common loans that may meet your requirements include:
- Fixed rate – can help soften impact of any future rate rise
- Split rate – offers the security of fixed rate with the flexibility of a variable rate
- Line of credit – good for financing renovations or additional property investments
- Lo-doc – for the self-employed, usually requires less documentation, such as establishing proof of income
- No deposit – can’t save for a 5% deposit? This loan will let you finance 100% of the purchasing price by using a guarantor
- Interest-only – popular for investors who don’t want to pay the principle component of a mortgage. Usually lower repayments amounts, leaving room to pursue other investments
- Construction – for additions or building your own home
There are a range of tools now available, such as the internet, to help research, compare and contract loans. For many borrowers, however, lending advice from a mortgage broker is the easiest and usually most effective option for avoiding confusion and finding an appropriate home loan for your needs.