How To Choose The Right Home Loan For You
Buying a house is a huge step. Not only does it require a lot of planning, but it is also time-consuming. However, if you prepare well, you can get a very appealing home loan that will take a big load off your shoulders.
In Australia, there are about 10.3 million properties, out of which 6 million have mortgages against them.
However, there are numerous types of home equity loans in the market today, all from different banks. So it’s pretty easy to get confused, especially if you’re buying a house for the first time.
Here Are Four Prime Ideas To Choose The Right Home Loan For You
If you want to know which home loan will be the best for you, this article can give you some pointers.
💸 The Credibility Of The Provider
One of the best ways to choose the right home loan for you is to first check the credibility of the loan provider.
A lot of agents might approach you and say that their interest rates have never been lower. But how do you know whether their claims are true or not?
Or maybe they’ll promise you very high loan amounts, and then just before you get your loan, you’ll discover that the loan amount has now been reduced.
So it’s always better to double-check a loan agent’s credibility by first calculating your loan eligibility yourself. This way, you’ll determine whether to believe someone else.
💸Rate Of Interest
Another basic factor that will help you choose the right home loan for you is the interest rate.
The interest is factored into your EMI or equated monthly installment when you apply for the home loan. It’s also charged on a reducing balance basis, which means that the outstanding amount gets reduced with every EMI payment.
Home loans in Australia have an interest rate of about 6.09% to 6.24% pa. Female borrowers are often charged even lesser discounts, but this is limited to certain banks only, so check with your loan provider for more information.
💸Type Of Loan
Home loans are of two main types, floating and fixed. A floating home loan interest varies throughout the loan period. And a fixed one, as the name suggests, remains the same.
While choosing the right one among all home loans Australia, it’s important to remember which kind of interest you’ll be paying off.
Fixed rates come at slightly higher prices, which is why many people prefer floating interest rates.
If you’re not sure of where the interest will lead, then going for a floating rate will be a better option. However, if you think you’ll be able to repay within 10 years, then go for the fixed one.
💸Maximum Loan Amount
The maximum loan amount you can borrow for your house is decided by two factors: the value of your property and your income level.
Most banks can fund around 70-75% of the property amount, but a few can go as high as 80%.
Your bank will also look at how much your yearly income is and whether you have a good credit score or not.
Your credit score depends on how quickly you pay back your credit card bills and any outstanding debts. If your credit score is strong enough, you can even ask your bank to consider lowering the interest rate.
💸Extra Charges
If a loan provider assures you you’ll get lower interest rates, don’t immediately finalize any deal with them.
Bank loans often have hidden charges which people miss out on. So read the terms and conditions very carefully before making a decision.
If the terms and conditions of the documents explicitly claim that there are no extra charges, then you can go ahead.
Other than this, there are also processing charges imposed by banks. This will typically take place after an inspection of your property and income. Again, you can negotiate with your lender regarding the processing fees.
Over To You…
These are the few basic factors that will help you choose the right home loan.
If you have any further confusion, don’t hesitate to contact your bank and ask them to explain the technical aspects and other important terms of home loans.
Read Also:
Leave A Reply