As the finance industry gets more competitive and complex, it’s becoming increasingly difficult to choose the right home loan. There are different factors depending on your personal situation.
Here’s a checklist to get you started in choosing the right home loan for you:
1. How much deposit do you have?
Different lenders offer loans with different loan to value ratios. However if you have less than 20% deposit you may need to pay for lenders mortgage insurance which protects the lender against potential losses in the situation where you are unable to repay your loan.
2. What about the fees?
Depending on the loan chosen, there are usually a number of fees that apply. These could be:
- Application fees - lenders may charge an upfront establishment fee and application fee.
- Property valuation - lenders may charge for a valuation of the property.
- Other fees can include account keeping, annual and redraw fees. It’s important to understand what fees you could be paying before signing up your mortgage.
3. Features important to you
Interest rates and repayments are important but so are features. You don’t want to be paying for features that you won’t use.
Some of the most popular features include an offset account - You deposit money in an account and receive interest in the form of a reduction in the interest due on your loan.
A redraw facility - with many loans, if you make extra payments you can get the money back later (but bear in mind some are easier to access than others) and the ability to make extra repayments (although some loan types may limit the amount you can pay without getting charged a break fee).
4. Comparison rates
Comparison rates can come in handy when understanding the true interest rate costs of your loan. Lenders may advertise a very low rate, however the comparison rate represents a truer rate – and could be the cheaper option in the long run.
5. Getting it right from the start can ensure you choose the right home loan.
Weighing up the pros and cons based on your personal situation and choosing a loan accordingly can save you headaches and money down the track! Fixed or variable, fully featured or no frills – these are all discussions and options that we at Focus Property Wealth can walk you through.
Our experienced team of mortgage specialists are here to help you make the right decision for your personal situation. Click here to find out about your home loan options!