Buying a home in Australia is always exciting but challenging whether you are a first-time homebuyer or planning to upgrade. To help you out, we have run down some of the important things regarding home loans, home loan calculators, brokers and more:
Prepare To Buy
Undoubtedly, the process of buying a home is daunting but with preparation, it can become better and manageable. Preparation of home includes savings, budgeting, getting finance and more.
Budgeting and Savings
You need to check out your expenditure and income to work out a practical budget. To take control of the finances, it is crucially imperative to set a realistic budget.
Make sure you have started doing savings for your home deposit prior to the home buying process. To do so, try to cut down your unnecessary expenditures.
It is imperative to manage your finances and maintain a good credit score to increase the chances of a successful home loan application. If you have bad credit score then you might get the home loan approval but with the higher interest rate.
Get Home Loan
If you are ready to buy a home then you might need the financing support that will include loan application submission to the lender.
Are you ready to apply for home loan in Australia? If so, then start doing research to find the right home loan option. There are numerous home loan types available that you need to know before choosing one.
Understand the Home Loan Types
When you will explore the market, you will across different home loan types. It’s difficult to know which home loan is right for you. Some of the home loan options are given below:
First Time Homebuyer Loan
The First Home Owner Grant is the special offer for first home buyers in Australia. If you are a first-time homebuyer then you are entitled to a base amount of $15,000 (NSW), disbursed by the Australian Government.
Many people prefer a short-term loan with higher repayments while others prefer to pay for long but little less. You also get the option to choose the variable rate home loan with flexibility or fixed rate home loan with certainty.
Here we have run down brief pros and cons of different home loan types:
Interest and principal repayments
Most of the people prefer this home loan option. In this type of home loan, each of your payment will cover the interest and principle both. With time, you will pay off more and more principle.
Interest only repayments
In this type of loan option, you will only pay off the interest for a period. After you will end up paying the interest, you can start paying off the principle. You can use a loan repayment calculator to calculate the extra interest value that you need to pay off on an interest-only loan.
Three standard types of home loans include:
In a variable rate home loan, the repayments vary depending on the rise and fall of the interest rates. The repayments increase if the rates go up and the repayments decrease if the rates go down.
This loan type is a right loan option especially when Australia have lower interest climate. The best part of this repayment is that you are allowed to make extra repayments to pay off sooner. Even you can also choose the option of 100% offset which is not acceptable in a fixed rate loan.
Fixed Rate loans
In a fixed rate home loan, your interest rates are fixed for a period. At the end of that period, you can opt for variable rate home loan or another fixed rate period.
Certainty is the big advantage of this home loan type. You get the clear idea about the repayments and this will help in budgeting. However, you will not be able to get the benefit of paying lower repayments when the interest rates fall.
If you still have any doubts regarding home loan types, you should contact a home loan broker for a better understanding.