In today’s day and age the number of lenders competing for your home loans together with the amount of different products in the market can make it a minefield when it comes to applying for a home loan. Often the lowest advertised interest rate is not the loan which will best suit you.
We have come up with a list of 7 items that we suggest you consider before you apply for a home loan:
1. Interest Rate - does variable or fixed suit your needs? You need to consider what type of interest rate you are comfortable committing to.
2. Savings – The amount of the deposit that you need to save for a loan varies between lenders but the standard is at least 5% of the purchase price of the house. The typical ways that lenders determine the extent of your savings are:
3. Credit cards - Reduce credit cards and limits that you do not require. This is a very simple way to increase your borrowing power - the reason is that the higher your credit limit, the greater the potential for you to get into financial difficulty.
4. Concessions Available - Find out if you are entitled to any concessions, such as First Home Owner Grant or a pensioner discount on Stamp Duty.
5. Commit to only what you can afford to repay – It is important to only borrow what you can comfortably afford to repay. You should have a personal budget of income and expenses and consider any extra expenses which will come with owning a property.
6. Costs associated with buying property – It is very important to allow for all costs when buying a home. Some of the costs over and above the purchase price of the property include – Stamp duty, title registration fees, valuation fees, mortgage registration fees, mortgage insurance premium if borrowing in excess of 80% of the property value and solicitor’s costs for the conveyancing (see our article at http://www.cormistonlegal.com.au/services/conveyancing-in-tasmania-costs-and-expenses-explained for an explanation of the costs involved in conveyancing).
7. Choosing a Broker – You may wish to choose a mortgage broker to do a lot of the work for you. This is especially important if you are a first time home buyer. A good broker will be able to locate a loan to achieve your objectives.
It is important to note that this is not financial advice but general guidance if you are looking to borrow money to purchase property. Cormiston Legal is a Tasmanian law firm specialising in Property Law and Conveyancing.
Whether you are buying or selling property in Tasmania, we are here to help you. Please contact us on 03 6332 9353 or use our Contact Us form - http://www.cormistonlegal.com.au/contact
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