Whether you are buying a home for the first time or seeking to invest in property, managing and maintaining a healthy home loan takes knowledge and diligent work. Frankly, “healthy” will mean different things to different people, so what follows is general advice meant to help you understand typical loan experiences. Your specific circumstances may be different.
If you have questions about the loan process, your ability to qualify for a loan, or need home loan advice, the Oak Tree Finances home loan Gold Coast team are available to assist you. We are more than happy to answer any questions you may have.
Pay what you can afford
An important aspect of having a healthy home loan is staying within your budget and keeping in mind that the cost of the loan usually includes principal and interest. Making a budget is a critical first step in buying a home, and it will help stay focused on the road to homeownership. No one wants to see people get overwhelmed with financial problems and a budget helps prevent that. Commit to it throughout the loan process.
Types of loans
Getting a great deal on a healthy home loan means being informed about all your options which includes the types of loans and interest rates available. Small changes in the interest rate can make a big difference since they are an ongoing expense over a number of years.
Principal and interest loans
This loan is typically what people apply for and requires repayment on the borrowed amount (the principal) as well as paying interest on that amount. The period of the loan (loan term) is flexible but is often 20 to 30 years.
Interest-only loans
Initial repayments on these loans (say five years for example) apply only to the interest so the debt isn’t reduced. The repayments are lower during this period but increase after any interest only period ends.
Keep it short and low
The amount of time you have to pay off the loan is known as the loan term, and it affects your mortgage repayments as well as how much interest you will pay. Shorter terms, for example, 20 years, means more expensive repayments and less interest. Longer terms, for example, 30 years, means lower repayments and more interest.
Look for the lowest interest rate possible as it can save you thousands of dollars over time. Examine your options and do a home loan comparison to ensure you get the most affordable choice.
Calm, cool, & collected
This tip partners well with the budget advice, stay logical and don’t let excitement betray you. It is exciting to invest in property or buy a home but if you get emotionally carried away you might end up hurting yourself. Keep a checklist detailing your needs and limitations and refer to it often. This should help centre you and find the best property for you.
Watch out for unnecessary charges and fees
Making steady payments and building equity are important parts of the healthy home loan process, so charges and fees that get in the way will slow you down and take money unnecessarily out of your account. Make sure you ask questions about the charges that appear on your statement since even the smallest amounts add up over time.
Get the most for your money
Aside from a good interest rate, it’s important to look for other deals or offers that will help you pay off your loan quickly. Look to add features such as a mortgage offset account, which lets you pay less interest, or the ability to make additional payments without being hit with a fee.
Are you ready to be a property owner?
Buying property is a stimulating experience and we want to see you succeeded at your goals. Oak Tree Finances is a mortgage broker Gold Coast residents and beyond, trust and look to for advice. We offer home loan brokerage services Australia wide so if you are ready to start the process of buying a house get in touch on 0404 403 066 or contact us on online.