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Sorting Your First Home Loan

by Marquette Turner Luxury Homes

in Features, Money & Business, Variety

In Australia and New Zealand buying your first home can be a challenge, but it is one worth striving for, as there are benefits to home ownership that stretch beyond simply having housing security, but sometimes saving that initial deposit is even harder than paying off the loan. 

Very few people can buy a home without a loan from a bank, and making sure that you get the best deal for your situation and are able to set your mortgage up in a way that creates long term security without short term financial strain can be a trial. 

There are so many different options, and different ways to structure a home loan, that it really makes it worthwhile to talk to mortgage experts. Not only are mortgage brokers able to give you excellent advice on how to best structure your home loan so that you pay as little interest as possible over the life of the loan, but they can help you get your mortgage sorted in the first place. This can be particularly reassuring if you are applying for a loan with low income, low deposit, other extenuating circumstances, or simply find the whole process far too confusing. 

Real estate and mortgage broker - Photo by Austin Distel on Unsplash - Marquette Turner Luxury Homes
Photo by Austin Distel on Unsplash

When To Talk To A Mortgage Broker

You have probably been looking around at houses for sale, so have an idea of how much you would like to spend, and possibly how much you need to save to get your deposit together, but working these things out and actually making it happen are different things. 

Start saving as soon as you can, even just a few dollars a week starts to add up, and you can usually have this taken out of your wages and deposited into an account before you even see it to help stop you from spending your savings. 

The sooner you talk to a mortgage broker, the sooner you will have a clear indication of what you need to do and how much you will need to save. Brokers understand that there are different options depending on which bank you go with, which state you live in, and what income bracket you are in. They may recommend that you pay off debt as your priority, as this will sometimes give you a significantly better credit rating. They may also be able to look at your rental history and suggest ways in which you can use this to secure a loan.

Do You Need A Bank Mortgage?

This is one of the big reasons to see a broker, because no, you do not need to stick with a bank to get a mortgage, and they will often have better ideas on the pros and cons of getting a home loan through a non-bank lender (see here).

Non-bank lenders are still subject to all financial regulations set by the Australian Securities and Investments Commission (ASIC), and although they may have slightly higher risks than a large bank, the risks are still unlikely to have an effect on your homeownership.

The biggest downside to looking through a non-bank home loan is less variation on mortgage options. You may also find that they don’t have physical branches like one of the bigger banks, although some will have mobile banking managers that can come to your home or office, otherwise most transactions are done online or via the telephone.

Fixed Or Floating? 

This is an area that often confuses new home owners, should they look at getting a mortgage that has a fixed rate, which will mean that they can have security around what their payments will be, or get an adjustable rate, which means they can pay extra, but also can take advantage if interest rates decrease. 

Some of the research around this suggests that which option will suit you best will depend on your personal circumstances rather than the amount of loan https://www.unsworks.unsw.edu.au/primo-explore/fulldisplay/unsworks_51363/UNSWORKS. Raise this with your home loan expert, and they will be able to work out different calculations for you that can show how increased repayments can reduce the term of your loan or reduce the amount of interest you pay, or how a longer term can allow for a smaller weekly commitment that may allow lower income families to get into a home faster. 

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