Estate agent handing over keys, and a stamped mortgage document

Choosing a Home Loan – Deposits, Features and Other Considerations

The right home loan is the key to your new home – for living or investment – and a great way to access extra funds. Home loans are so crucial to buying success, and in part 1 of this blog we addressed home loan amounts, purposes and types. 

Today we’re going to close out the conversation, giving you expert advice on deposits, as well as loan features and fees, and things to consider. 

Saving for a Home Loan Deposit

Different loans require you to provide a different deposit amount, but saving 20 percent of your chosen home’s value will put you in a strong position. Not all loans require 20 percent upfront, but a bigger deposit will save you money in many ways. Here’s a few advantages of a bigger deposit: 

  • They reduce the amount you need to borrow
  • They make your loan application stronger
  • They prevent you from having to pay Lenders Mortgage Insurance (LM), an insurance cost when you want to borrow in excess of 80 percent 

Features to Look For

What should you look for when casting your eyes over a home loan? Loans are about more than just low prices. Here are a few features to look for: 

  • Split option – having a part fixed, part variable loan
  • Interest only – an option to consider for investment properties
  • Lump sum repayments – the ability to make large payments as necessary
  • Additional repayments – the ability to make extra payments
  • Mortgage portability – the ability to transfer your loan to another property
  • Redraw facility – the ability to access excess money you have added to your mortgage 

Fees to Look For

Before accepting a home loan based on its range of extra features, stop to consider the possibility of hidden costs. These nasty surprises can derail your budget – the basis on which you selected your loans. Some fees your loan may include are: 

  • Application fees
  • Ongoing costs
  • Additional repayment fees
  • Late fees
  • Exist fees
  • Discharge costs
  • Stamp duty
  • Portability charges
  • Redraw fees
  • Re-fix fees
  • Switching charges

Final Thoughts Before Your Loan

We understand that committing to a loan is just as a big as buying a house. While we think we’ve covered a lot in these two blogs, there are still a few final things to think about. Here are some final thoughts: 

  • Plan for flexibility – while your repayments should equal around 30 percent of your income, an extra few percent will protect against unexpected personal or financial changes, as well as market fluctuations
  • Documentation – if you don’t need a low doc loan, organising your pay slips, bank statements, credit history and more can fast track your approval
  • Fine Print – Don’t just read every line – including the product disclosure statement – ensure that you understand the implications and talk to an independent expert if you’re ever unsure 

There’s the last of our general home loan advice. Remember to read part 1 of our 2-part blog if you haven’t already and contact our conveyancing experts for more personalised information. All Hours Conveyancing are Melbourne’s property experts, and we can get you into your home faster. Call us on 03 9649 7832.

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