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Finding the right Home Loan |
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Finding the right home loan involves answering some carefully crafted questions and most of all taking your time to assess every step of the way. |
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| Author: Danny Adams |
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1. How much time do you have? This is an important question especially if you have just signed a contract to buy a new house. Each bank will be faster or slower than the next so it is important to know what their processing times are before you start.
2. How much do you need to borrow? Remember that banks can only lend up to a certain proportion of the value of the house you want to buy. Some banks will go to higher percentages than others so you need to determine exactly how much you need after taking into account other things like application fees, stamp duty and lenders mortgage insurance. It is only after calculating these figures that you can determine which banks will be able to meet your needs.
3. Do I need a fixed or variable rate? This will be partly determined by what you are planning for yourself over the next few years. For example if you are planning a family then maybe you will need the peace of mind that comes with a fixed rate loan. That way, you know your repayments are fixed and any variations to the interest rate will not affect you. This way you can budget for many years ahead. A variable rate may well be cheaper than a fixed-rate but you need to estimate whether this will be able to afford potential rises.
4. Can you change products easily? Some banks make it easy for you to change from one product to another which means that you can take a loan which suit your circumstances now and then change to a different type of loan in a year or so to cater for your changing circumstances. This will not apply to fixed rate loans.
5. What type of added features do I need? Some banks offer full offset accounts which means that you can place any excess funds into this account and attach it to your home loan. The effect is that the amount upon which interest is calculated will be reduced by the amount of money you have in your transaction account. This means you will pay less interest on your home loan.
6. Do I qualify for a reduced interest rate? Most banks offer packages where they will discount the rate charged to your home loan if you borrow over a certain amount. You can get a discount of up 0.7% (as at January 2010 ), with some banks, if you are prepared to pay the annual fee which may be as much as $400.
Once you have considered each of the above points you will be in a much better position to work out which home loan is right for you. There will also be helpful to talk to a broker at about your options as there are many lenders who offer competitive packages only through mortgage brokers.
Spend an hour with your mortgage broker and it will be time well spent.
www.moneycomparison.com.au
About Author
Danny Adam is the Home Loan Expert for MoneyComparison.com.au
Article Source:
http://www.1888articles.com/author-danny-adams-29491.html
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