Finding the right home loan for you.
To make buying a home as stress free as possible, it is important to thoroughly investigate all of the options available and identify the right loan to suit your needs and lifestyle.
To make it easier for you to find exactly what you want, here are the top 10 questions you should ask when choosing a home loan.
- What loan will suit me best? Review all the features of the loan such as whether you can redraw or pay extra.
- What is the interest rate? The interest rate will either be fixed or variable and will be used to calculate your repayments. It will determine how much you’ll pay over the life of the loan.
- How much can I borrow? You will be able to borrow a maximum 80-95 per cent of the value of the property but consider how much you can comfortably afford to pay each month by discussing the monthly repayment amount.
- What deposit do I need? Most lenders require a minimum deposit of five per cent of the property’s value, and if your deposit is less than 20 per cent, then you may be required to take out Lenders Mortgage Insurance.
- What fees do I have to pay up front? Make sure you are aware of all the fees involved in taking out a loan, such as loan application fees and government charges including stamp duty, mortgage registration, mortgage transfer and Certificate of Title search fees.
- What other fees are payable? Find out if there are any monthly fees or charges for redraw so that you are aware of the costs.
- What is the total cost of the loan? Ask for the Comparison Rate for the loan you are considering, as this rate includes both the interest rate and most fees and charges payable during the life of the loan which is useful when comparing loans.
- Are there any benefits available to me when I take out a home loan? It is a good idea to check if your lender offers any benefits for taking out a loan, such as reduced transaction fees and if there is a fee for these benefits.
- Can I pay the loan off early? Chances are you may want to refinance your mortgage before the term is complete, so check whether you will be charged a prepayment penalty for doing so.
- What will repayments be should interest rates increase by three to four per cent? Ask how much your repayments will increase by if interest rates go up by three or four per cent so you can see whether you would still be able to afford a loan if interest rates were to increase.
^Paul – Lending Services Manager