Home Loan Tips
Always Make A Budget
One of the first things you should do when you’re starting to look at property is work out what repayments you’ll be able to afford – in other words, work out a monthly budget. Add up your total monthly income (after tax) including wages/salary, regular overtime, dividend/interest payments, rental income and any other sources of ongoing regular income.
Then work out your average monthly expenses, including other loan repayments, credit card repayments, vehicle expenses, medical expenses and any other regular ongoing expenses. By subtracting your total monthly expenses from your total monthly income, you should get a rough idea of what level of repayments you may be able to afford. We have a budget planner available for your use.
Get a Pre-Approval
The figure you came up with in your budget may not be the same as what a lender advises you are able to borrow. Different lenders use different ways to assess your borrowing amount.
The advantage of a no obligation pre-approval is that Your Home Loan Consultant can use the most suitable options to meet your individual needs and you can confidently look for your property knowing your budget range.
Once you’ve found a property you’re interested in, you want to ensure there are no little surprises that are going to show up after settlement.
Make sure your sale contract is subject to whatever inspections you think are necessary. A building inspection and a pest inspection are a must. You may also decide to get the property surveyed. If the inspections uncover any problems, you then have the option of backing out of the purchase, or negotiating with the vendor to either fix the problem or reduce the contract price.
Own Your Home Sooner By Making Extra Repayments More Often
One of the best ways to reduce your interest charges and pay off your loan faster is to make your repayments more frequently. Instead of making monthly repayments, try to make them fortnightly. This helps in two ways. Firstly, because there are 26 fortnights in the year, you will actually end up making the equivalent of 13 monthly repayments.
Secondly, as interest charges are generally calculated daily and accrued monthly, the more often you make payments during a month the lower the accrued interest will be. On a 25 year loan for $300,000, making fortnightly repayments would reduce your loan term by 4 or more years.
Maintain Your Repayments When Rates Drop
If you’re lucky enough to see the interest rates drop while you’re repaying a home loan, try to maintain your repayments at the level they were before the rate drop. The extra repayments will come directly off the principal loan amount, helping you pay off your loan sooner and reducing your total interest charges.
Manage And Monitor Your Loan With Internet Banking
Most lenders today have internet banking facilities, allowing you to access your home loan details over the internet. At the very least you should be able to check your home loan amount and view your transactions (payments and interest charges). Some lenders may have other Internet Banking features, such as allowing you to make lump sum repayments or set up periodic repayments and view how far your payments are in advance.