Many of us are willing to take out a 30 year mortgage in the knowledge that one day we will ownGet Approved with Us our own home. But just because the loan term is stated as 30 years, doesn’t mean you should take the full 30 yrs by making the minimum repayments. It’s in your interest to pay off your loan faster and you’d be surprised by some of the simple things you can do that will make a big difference. Getting the most of out of your home finance needs specialist advice. By using the home loan services of a professional you will be able to buy property with confidence, knowing all the relevant issues have been considered and you have been able to secure the best home loan for your personal situation.
1. The Loan Type.
Loan types have different interest rates, some limit the amount you repay, some have attached fees and some have low introductory rates but lock you into higher rates later in the loan. It is important to consider the comparison rate of your loan. As a general guide, Interest Only loans generally offer the lowest total cost over their term of the loan, as well as offering the greatest degree of flexibility. For example, a Principal and Interest loan may have a maximum additional repayment amount of $25,000 per year, and many associated cost, but a simple Interest Only loan usually allow you make as many unlimited deposits and withdrawals as you like, therefore maximising the opportunity to repay your loan early if conditions allow. Some Principal & Interest loans have offset account (often with associated fees) which offer a great alternative especially if you are not that great at saving. See us for specific advice on your circumstances. Mortgage rates change over time as we all know, and a carefully structured loan will allow you to maximise the benefits of interest rate changes.
2. Upfront Cost & Fees.
Bank fees It can be very tempting to add the costs of your loan such establishment fees, legal fees and mortgage insurance to the loan sum as it seems like it makes little difference to the repayments. Paying these off immediately will save you on interest and substantially cut the length of your loan. You willl need to do all the numbers when choosing which Home loan rates are best for you.
3. Look Outside the Major Banks.
Many of us have grown up with the major banks from our school banking days, or if we are relative new comers to Australia we may be attracted to big bank names that we feel we can "trust". The simple fact is that all financial institutions in Australia are very tightly regulated and there is absolutely no market evidence that shows you are better off with a major bank for an average home loan. There are many smaller banks, credit unions and specialist boutique lenders in the market today that have excellent financial backing and very competitive products. We can match your situation the all these lenders to give you the most appropriate loan for your circumstances. It is particularly important to look outside the majors for your home loan financing if you have missed a mortgage payment lately or have other credit issues.
4. Consumer Debt.
Consumer debt is like CANCER. It can consume you, your assets and equity if you are not a good financial manager. We DO NOT recommend the outright consolidation of consumer debt with asset (home or investment) loans unless it done in conjunction with a strong money management plan. After all, there is always a reason why the consumer debt occurred in the first place, and the last thing we all want, is to reduce your overall repayments just so you can commit to more bad debt. It is far better to eliminate the consumer debt by other ways and live within your means. Having said that, and to repeat, under the scope of good money management with regular reviews, the consolidation of short term high interest consumer debt into long term low interest rate loans is a very viable and practical method of restructuring your cash flow. If you are experiencing cash flow issues, call us to discuss your best options for the future.
5 Use your Loan or Offset Account.
By that, we mean, make the best use of these accounts. For many of us, the highest interest we will have access to is that charged by our lender. So by putting all our pay, savings, and other income into our home loan represents the best return we are ever likely to get. Remember, your lender calculates the interest owing on your account on a daily basis, so for every day your pay is in you loan account, it is saving you interest. Even if you draw some of it out after a week, you will still be way ahead.
Most important of all is to get good independent advice before you run to the major banks. You may think your loan is straight forward, but it is an almost certainty that you are not aware of the checks and rules that bank credit departments use to approve your loan. In our experience, most loans have a degree of difficulty that will cause delays or declines if they are not addressed prior to application. We can accurately advise you on these matters and assist your application process. See our section on Difficult Loans and bad credit loans.
6 Helping the kids.
Helping the kids secure their first home is a natural wish of most of us, but it is an area fraught with danger if it not done with proper advice and planning. There are many cases in our own area where either the kids or parents home loans in Perth have fallen apart because they failed to take into account the possibility of future requirements of either party. There are many finance options available including co-ownership which may be useful for this or other property investment situations.