Before you start looking for a property to buy and choose the right home loan, you need to assess the condition of your personal finances. We suggest you start planning by implementing a "home loan checklist" to assist in getting your finances in order.
Your Home Loan Checklist
- Do a Budget: Use the Singh Finance budget planner to work out if you can afford a home loan.
- Work out what you can afford to borrow: Use the Singh Finance borrowing power calculator to work out:
- how much you can borrow
- how much your repayments might be
What Costs Should I Consider When Getting a Home Loan?
You should include up-front costs such as stamp duty and legal fees. You should also consider ongoing costs such as loan repayments, land and water rates, home contents insurance and repairs.
How Much Do I Need For a Deposit?
A reasonable amount is to aim 20% of the purchase price, plus enough to cover costs.
What are My Home Loan Options?
Take the time to consider the following home loan options being offered by many of the lenders/credit providers, and shop around for the best deal:
- Variable Interest Rate Home Loans or Fixed Interest Rate Home Loans
- Interest-Only or Principal & Interest (P&I) Repayment Home Loans
- Combination (Split) Interest Rate Home Loans
The Difference between a Fixed Interest Rate Home Loan and a Variable Interest Rate Home Loan
To help you understand the difference between a fixed interest rate home loan and a variable interest rate home loan, we have provided the following details for you to consider:
Fixed Interest Rate Home Loans: The interest rate on this home loan type will remain the same for a fixed period. The fixed period is usually between 1-5 years. At the end of your fixed term, you have the following options:
- Commit to another period of fixed interest rates
- Switch to a variable interest rate home loan
- Refinance home loan with either your existing lender or another lender
With a fixed interest rate home loan, you will have the assurance of knowing:
- What your repayments will be over a set period of time
- What your interest rate charges are over the life of the loan
- That you have the ability to plan your finances and stick to your budget, even in times of economic uncertainty
- That when interest rates rise, your repayments will not increase
- That you do not have to contend with varying loan payment amounts that will fluctuate with interest rate movements
- That you have the flexibility of locking in your fixed rate
Variable Interest Rate Home Loans: This home loan type enables you to take advantage of falling interest rates when the Reserve Bank decides to drop their official cash rate. With a variable interest rate home loan, the interest rates charged to you can go up and down.
A variable interest rate home loan allows you to:
- Take advantage of inclusions such as a 100% offset account, free additional repayments and redraw facilities
- Take advantage of the equity you have built in your home by taking a line of credit option
- Make unlimited extra repayment each month so you can pay off your loan faster
The Difference between an Interest-Only Repayment Home Loan and a Principal & Interest (P&I) Repayment Home Loan
To help you understand the difference between an interest-only home loan and a principal and interest (P&I) home loan, we have provided the following details for you to consider:
Interest-Only Repayment Home Loans:With this home loan type, your repayment amount will only cover the interest on your home loan. The principal amount you borrowed will not reduce unless you choose to make extra repayments.
The interest-only repayment home loan is particularly suitable for:
- Investors who are looking at buying an investment property
- Business owners with unpredictable incomes who need to maximise their cash flows
- If you receive your income mostly in the form of frequent commissions or you receive regular bonuses
- Investors who are confident their investment real estate property purchase will give them a good rate of return
Principal and Interest (P&I) Repayment Home Loans: This is the most common home loan, where you make regular monthly payments against the principal (the amount borrowed) as well as interest.
The principal and interest (P&I) repayment home loan is usually repaid over an agreed period, such as 25 to 30 years.
What is a Combination (Split) Interest Rate Home Loan?
A combination (split) interest rate home loan allows a mixture of security and flexibility. This where you pay:
- A fixed interest rate payment for an agreed portion of your home loan, and
- A variable interest rate payment on the remaining portion of the home loan
What Home Loan Features Should I Consider?
To explore the numerous home loan features/inclusions included in your home loan package, we suggest that you speak to our professionally qualified and expert finance brokers. Some of the more popular home loan features are:
- Redraw and Access Availability
- Offset Account
What is a Redraw and Access Availability Feature?
Having a redraw facility allows you the option to pay extra money into your home loan that you can take out (or redraw) later if you need to. Be aware that there may be a redraw fee for each time you redraw, and may be restricted to a minimum redraw amount.
What is an Offset Account?
An offset account is a savings and transaction account linked to your home loan. The balance in your offset account is credited towards the amount you owe on your home loan, thereby reducing the amount of interest you pay.
For example, if you have a home loan of $400,000 and you have a balance of $50,000 in your offset account. You only pay interest on $350,000.
Can You Arrange a Pre-Approval for Me?
Yes, our professionally qualified and expert finance brokers will provide you with a convenient pre-approval so that you will have the peace of mind knowing that:
- Your home loan application has already been assessed by an accredited finance broker and in accordance with the responsible lending criteria
- Your finance is already pre-approve, and you will also know the conditions of your pre-approval
- You will have the upper hand when negotiating the with the vendor, builder or real estate agent
Our Tips for a Better Home Loan Package Solution
- Comparing Your Home Loan Package
The right home loan package for you should have a particular combination of features, services and interest rate. Singh Finance can help you make the comparisons easy and more importantly our finance brokers will provide you with the following services to get you the best home loan package:
- Identifying home loan packages and suitable lenders/credit providers that will match your individual needs
- By liaising with the lenders on a regular daily basis, our expert finance brokers will be able to get you the best home loan package and at the right price
- Do You Have Time to Go Out and Get your own Home Loan?
Lenders/credit providers may promise quick service, and the big banks can be as slow as tiny mortgage companies. In these cases, it helps to have a professionally qualified and expert finance broker on your side that can help you push the lender/credit provider along on your behalf.
Customized Home Loan Solution
Our team of professionally qualified home loan expert take pride in their ability to structure and implement a customized home loan and insurance package solutions that meet your needs. They will also:
- Help get you the best home loan package you want in the quickest possible time and without the hassle of running around trying to find your own finance
- Liaise with the lenders to give you the perfect home loan package and at the right price
- Offer you the highest level of customer service
- Build a strong relationship with you
- Go out of their way to develop a long term customer loyalty with you as we do with all of our clients
Why Choose Singh Finance?
As with any large financial decision that you have to make, it is always wise to seek expert advice from our team of professionally qualified finance brokers, before getting your home loan, because:
- We know what the standard requirements for home loans are
- We can accommodate a much faster credit decision for you, provided that we receive from you all the required documents as soon as possible
- We can calculate how much you can borrow
- We can calculate your interest rate and the monthly loan repayment amount
- Our team of professionally qualified finance brokers have successfully helped a number of clients with home loan solutions
- We deal with numerous lenders/credit providers on a regular daily basis and we know the credit policies and guidelines of the lenders/credit providers
Contact Singh Finance Today
For an obligation free assessment and to arrange a pre-approval for you, please contact us today on 0424 190 908 and "Enquire Online Now". One of our professionally qualified and expert finance brokers will contact you to make an appointment at a time and place convenient to you.
Singh Finance Pty Ltd
P.O Box 4042
Parramatta NSW 2124
Ph: 0424 190 908
Fax No. 02 9608-6279
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