How to choose the best home loan for you
Determine Your Goals
Are you looking for a family home? Or an investment property? Depending on whether the home will be owner-occupied or not, depends on what type of finance you may choose and the financial management of the property. If you want to use the property as an investment you can choose to structure your loan differently. And there are different loan types for first home buyers, than say, someone buying a second home.
Loan Structure
So, you want to purchase a property and would like to pay it off quickly, have a low interest rate and flexibility? To some, this may seem impossible but to us, we know it’s achievable. But only with some careful planning, budgeting and management strategies.
Generally speaking, the less features a loan has the lower the rate, but if you would the flexibility to make additional payments occasionally then you may find your loan comes with a higher interest rate. It’s all about what is right for you, considering your circumstances now and predictions for the future.
Fees and added costs
Most home loans will come will some types of fees. There may be account keeping fees, set up fees, late repayment fees, exit fees and redraw fees. You can easily calculate this extra costs with on line mortgage calculators, and back up your findings by talking to a mortgage broker. Mortgage Interest Rates
Interest rates have seen massive cuts during late 2008 and early 2009. Home loan rate fell from nearly 10% to around 5% in the space of a few months. But, as the economy regains strength, the Reserve Bank of Australia will move to raise official rates again, and home loan rates will follow upwards.
RBA governor Glenn Stevens has warned homeowners to prepare for higher rates. He noted that as a rule of thumb banks allowed for a 2 per cent interest buffer for people taking on a mortgage.
Most major banks have recently lifted rate for fixed rate loans, and while any increases are expected to be small and gradual, it is wise to prepare for rates to rise by at least 2 per cent by the end of 2010.
Which Loan is right for me?
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