Prepare extra funds on top of the purchase price:
- Solicitors cost around $600-$1500.
- Stamp duty on property depends on the purchase price and varies from state to state.
- Stamp duty on mortgage documents depends on the loan amount and varies from state to state.
- Registration fee, (allow couple of hundreds).
- Application fee. (Usually $0-$750)
- Mortgage Insurance, only if you borrow more then 80% Loan To Value Ratio (LVR).
- Valuation fee-normally can be avoided, otherwise allow $250.
- Building and pest inspection, $500-$600 for normal 3 bedroom.
- Removals, depend on volume and distance.
Remember to save extra money for home loan fees:
When saving the deposit for your home loan, don't forget to add in the extra expenses that come with buying a house. These include: legal and solicitor's costs; stamp duty; mortgage insurance; building inspection, pest inspection, strata inspection and survey reports; application and registration fees.
How to quickly pay off your Home Loan:
- Ask us to email you our free budget planer and stick to it.
- Pay your Home Loan fortnightly.
- Register for our free 6 month Mortgage Review (we recheck your Mortgage Health).
- Pay your salary and any other cask to your Home Loan
Make extra payments on your loan whenever possible:
This is the best way to reduce the interest you will need to pay on your loan. In most cases, every dollar that is paid on top of the required payments will save about 2 dollars in interest!!
Extra payments can be made as lump sums or you can choose to constantly increase your regular repayments.
It is important to ensure before committing to a loan that you are able to make extra repayments without incurring a penalty. Fixed rate loans and basic loans will often have fees attached to extra repayments.
Making weekly or fortnightly payments instead of monthly payments will also help you to pay off your loan quicker. This will result in more repayments in total (there are more four weeks in most months!) and you will reduce interest charged to your loan.
Lower your mortgage payments by paying interest only:
When you choose a home loan with Interest Only repayments, you are obligated to pay the lower fortnightly payment. This can help you when the times are tough, and with the right loan structure, you can always pay the extra funds to the loan account, but again-you are not committed to do so.
You can use the extra funds as a security for emergencies, because the lender will consider them as extra payments and you can use the Redraw facilities to take the cash out. With Interest and Principal repayments, the lender will not consider the principal portion of the repayments as extra funds, meaning you can not redraw cash out of the loan.
Who it's for?
People who stretched their budget.
People who want month to month flexibility.
Investors who need immediate cash ready to go when the right buying opportunity arrives.
Enquire about 'professional package' discounts:
Professional package discounts are available to those earning more than $50,000 or $80,000 annually (with your partner). This can often result in a discounted interest rate for your loan (mostly up to 0.7%).
Often relationship discounts are also available if you can consolidate the business for several properties with the one financial institution.
Fully investigate fixed rate loans:
Fixed rate home loans can be good when interest rates are increasing but they are much less flexible than variable rate loans. Often, fixed rate loans will not allow a large amount of extra repayments (often limited to $5-10 000 / year).
Fixed rate loans do suit some lenders, often those on non-flexible budgets.
You will also need to consider your needs over a long term - does your loan contain enough flexiblily for the next 10 or even 20 years?
Consider other options than a standard home loan:
There are a number of reasons why some customers would not be able to attain a standard home loan. These include: poor credit history; being self employed; or being a new resident in the country. In these situations a non conforming, 'low doc' or 'no doc' loan should be considered.
There is an increasing range of non conforming loans available some of which offer rates about as low as standard home loans.
Advice for new borrowers in the current market:
- allow for interest rate increases when budgeting
- use as large a deposit as possible when borrowing
- invest any spare cash back into your loan
- make sure other debts are under control before taking a home loan
- buy property for the long term
Advice for existing borrowers in the current market:
- make extra repayments wherever possible, this will help you combat rate increases and property price decreases
- investigate fixed rate options
- think and investigate thoroughly before borrowing against your home equity
- consolidate other debts (especially those with higher interest rates) with your home loan
Take into account a loan's features and rates:
When comparing interest rates, it is important to remember to take into account the loan's features when calculating interest rates. For example, a variable loan with redraw and offset features will often have a higher interest rate.
Take a look at portable loans:
When selling an old property and moving to a new one, a portable loan allows you to keep the same loan for the new property. This means that there are no new legal fees and loan application fees.
Investigate redraw facilities carefully:
Redraw facilities often come with standard fees and are often only available on standard variable loans which have high interest rates, make sure you understand all fees an charges before committing to a loan.
Keep abreast of fee and interest changes:
Compare not only the interest rates between different loans and different lending institutions. Also, compare the total cost of a loan taking monthly and annual fees into account.
Once you have committed to a loan you will also want to keep and eye on interest rate changes - consider maintaining the higher repayments even after interest rates drop to help you pay off your home loan earlier.
Always check your statements:
Everyone makes mistakes and it pays to ensure that none are made when calculating your loan. Mistakes such as the wrong interest rates being applied or the wrong balance showing can cost you dearly. Such mistakes are very common.
