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Now is a great time to get a new home loan if you are considering purchasing a property, especially if you are a first time home buyer in Perth, Darwin or Adelaide, as property prices are now very affordable, according to Shane Kempton, Chief Operations Officers, Professionals Real Estate Group.
If you are considering applying for a new home loan, then you should consider the following tips:
1.New debt: Do not take on any additional financial burdens during the home loan application process i.e. buying a new car on credit. New debt could complicate the home loan application.
2. A good tip is to ask for assistance from a reputable mortgage broker. Their services are free and they can source loans from a wide range of financial institutions. There are several hundred home loan options and securing an interest rate reduction of just 0.25% on an average investment home loan can result in thousands of dollars in savings over the life of the loan.
3. Interest Rate Rises: Take into account any future interest rate rises. Make sure you allow a margin in your budget for any future interest rate rises.
4. The costs. Don’t always select the home loan with the lowest advertised interest rate. Application and monthly management fees, for example, can considerably add to the overall cost of a home loan that might be advertised at a very low interest rate. Look at the comparison rate which takes into account these costs.
5. Check the fine print: Low introductory home loans, for example, may have high break costs or might revert to a high interest rate making this kind of home loan a more expensive option.
6. Ownership period: Determine how long you plan to hold the property. For example, if it is for a short period of time, then a home loan that offers very flexible conditions might be an attractive option.
7.Debt Reduction: Select a home loan option that allows you the ability to quickly reduce your home loan debt commitments. For example, the use of ‘offset’ accounts, a borrower may significantly reduce the term of the home loan and save thousands of dollars.
8.Mortgage Insurance: Make sure that you consider ‘surprise’ costs when applying for the home loan i.e. mortgage insurance