Navigating the course of home loans can be a dangerous mind field, without the right arsenal. To secure the best home loan that suits your financial needs, enlist the help of our guide to the Aussie home loan wonderland. To assist in cultivating an Aussie home loan that supports your lifestyle, it’s best to seek out expert advice. Experts say that retaining a balance between cash flow and home loan repayments is the key to a sustainable lifestyle.
Recent research conducted by Galaxy indicates that 25% of borrowers are struggling with home loan repayments, even with the current low home loan interest rates. Home loans don’t need to be stressful or fighting, they don’t have to hold you back; they can provide a secure home and lifestyle for you.
Right about now you could be thinking, “I don’t understand any of these terms, how can I even begin to apply for a home loan.” Well, as Ryan Gosling pointed out in the Big Short, that’s on purpose. Abnormal or confusing words can bore or disinterest a borrower. So, let’s go on the offensive and look at the most common terms you’ll hear when applying for home loans.
General terms you’ll discover when hunting for home loans:
Home loans calculator
A home loan calculator is an easy tool. It’s usually provided by your lender, to calculate your monthly home loan repayment. It includes how much you can borrow and how long it will take you to pay off.
Home loan Interest rates
When applying for home loans, the lender will offer either a fixed interest rate or adjustable rate. These rates will be added to your home loan repayment. We will explore interest rates further in the article.
Home loan comparison rate
By law, lenders are required to advertise a home loan comparison rate. In summary, the home loan comparison rate combines home loan repayment, term, repayment frequency, home loan interest rates and other ongoing fees and charges connected with home loans. Then it adds applicable home loan rates and the fees and charges and presents it as a percentage figure.
Lenders Mortgage Insurance
If your deposit of a home is less than 20%, the lender might want you to pay for lenders mortgage insurance, commonly known as LMI. This simply means the financial institution is insured if you are unable to make your home loan repayment.
Cash rate
This term is simply the interest rate set by the Reserve Bank of Australia. It moves up and down, and then reflects home loans interest rate offered by lenders.
Credit score
A number that is calculated from your credit files, such as home loan repayments, credit applications and public records.
How to compare home loans
Shifting through all the options when choosing your home loan can be daunting. However, there are plenty of easy to use tools and experts to help; so you’re never alone. When deciding on a home loan, it’s best to browse different lenders. There are thousands of lenders to choose from, ranging from banks to credit unions and non-bank lenders. When browsing different lenders, it’s important to ask for a key fact sheet. The key fact sheet provides full transparency and is vital to understanding home loan repayment, fees, and charges. The sheet will also provide a home loan comparison rate to test against other home loans.
Hunting for the right home loans lender
To discover the best lender that works for you it’s best to shop around. Firstly, understanding the health of your credit score allows you to enter with confidence in your financial position. Knowledge is power. To acquire the best home loan rates, it’s important to scope out the home loan landscape. To boost your chances of securing the best home loan for you, it’s best to get pre-approved for your home loan. This simply means your bank has pre-approved you for a home loan. Perhaps the most helpful stage of searching for the right lender is to compare home loan rates online. Understanding the current trend for home loan interest rates provides you with a starting point in your meetings with different lenders.
Types of home loan interest rates
Fixed rate
The key is in the name, a fixed rate is a locked rate that typically lasts 1-5 years. This rate gives you the freedom to plan your finances.
Variable rate
Home loan interest rates will respond to changes in the cash rate and other possible changes made by your lender. This type of rate is, of course, a riskier choice as it can move erratically.
Partially-fixed rate
This rate gives you the opportunity to pay a fixed home loan repayment on a portion of your loan and the rest as variable.
Introductory rate
Also known as ‘honeymoon’ rates, some lenders provide low-interest rates for the first 1-2 years of your home loan.
Tips for the first home buyer
Your first home is the pivotal moment in your adulthood journey. When your parents have finally lost the right to pester you about ‘getting on the property ladder.’ The key to acquiring your first home loan is a combination low-interest rates and other features that will suit your budget. Of course, a confidence starting point is to calculate your home loans budget. Using a home loan calculator is a great tool to assist in organising a budget. Comparing features on home loans is vital to securing the best first home buyer home loan. Find key features to look for below:
- Lending terms, including home loan rates
- Loan fees – Types of home loan fees including, exit fees, discharge fees, LMI, application fee, ongoing fees,
- Flexibility in making additional repayments
- Fixed-rate lending terms and conditions
- Quality customer service
Clearly, there are many potholes to look out for when applying for home loans, so it’s important to stay vigilant. Again, knowledge is power. Know where you stand in the market. Equip your utility belt with tools like a home loan calculator and home loans research. Game of Homes is here to help you navigate the landscape of home loans. So, keep in touch and enjoy hunting for your dream home.