Choosing a home loan that’s right for you (and your budget)

With so many home loans currently available, knowing which one is right for you can get a bit confusing. Which features should you look for? How can you reduce your expenses? What will benefit you most in the future? To help answer these questions, here are a few things to consider when choosing the right home loan for you and your budget:

Interest Rates
When comparing fixed, variable or split rate interest, it's important to understand the key features of each before making your decision. 

Fixed rate means that you'll know exactly how much you need to pay for the set period of the loan, which can be ideal in times where your budget is tight. The downside to going with fixed is that there are often fewer associated benefits and higher fees. Also, a fixed rate won't drop with market drops, meaning you could miss out on lower rates.

Variable rate, on the other hand, fluctuates depending on official rates set by the RBA. Whilst you do run the risk of wearing a rise, rates are generally lower with a variable rate loan and they offer more additional features such as advance payments and the ability to redraw funds.

Spilt rate allows you the flexibility of both fixed and variable. Simply decide what portion you want to dedicate to each side and enjoy all the benefits.

Low Deposit Loans
When you're short on savings but have a steady and reliable income source, going for a low deposit home loan could get you in the door sooner.  The downside to going low deposit is the additional expense of lenders mortgage insurance, something which is requested as safeguard should you fail to meet loan requirements. 

Minimising Expenses

Offset Accounts - Offset accounts allow you to pay less interest on your balance by "offsetting" it to an account attached to your loan. Whatever money you deposit into that account reduces the amount of interest charged, protecting you against unnecessary costs.

Lower fees over benefits - How much will you really use those added features? By opting to go without, you can save big dollars on loans that have low or no ongoing fees.

Consider your plans - What are your plans for the future? If you're planning a wedding, thinking about renovating or welcoming a new member to the family, you want to have the flexibility to redraw extra funds so keep this in mind when choosing your home loan. 

Go with a broker!

Consulting a Mortgage Choice broker before you apply for a home loan can give you access to loads of great advice generally at no cost to you. If you're still a bit unsure as to what will best suit your needs, or simply want better advice on creating the best application, utilising a mortgage broker will let you in on all the inside information. Want to find out more? For expert advice, contact Stuart Pullar at Mortgage Choice today on 07 3463 0500.

Posted in: Home loans

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