Buying your first home is not a decision to be made lightly and can even be intimidating. There are a confusing array of home loan options even then a number of steps required to complete the process. If you’re considering the purchase of your very first home, here are some tips to keep in mind.
Be Organised
Researching home loan options can be a very confusing task. One that may seem alluring on the surface may actually have a high interest rate after a certain allotted time period. Be organised and set your goals to get a better picture of what loan options suit you. Put together a budget to discern how much you can afford on a weekly, fortnightly or monthly basis. Once you’ve figured out your budget, you’ll know precisely what type of loan you can afford.Compare Lenders
Choosing the right lender is just as important as choosing the right loan. Do some background research and ask your friends and family about their own experiences – the latter is a great way to get a glimpse into the kind of service you can expect.If you’re finding it difficult to choose a specific lender, talk to a mortgage broker who can offer you options based on your situation and needs. If you’re struggling for a starting point, we have no problem recommending Bank of Queensland’s Variable Rate Home Loan as a great place to start (they helped us compile this article), and offers a range of features that may well be suited just for you.
Make sure you Understand each Home Loan Option
Just like buying a car, it’s important NOT to go with the first loan offered to you. Step back and look at each loan option to see which fits best with your long-term goals and budget. There are a wide range of home loan options to choose from, including:Standard Variable Rate Loans – this is one of the most common types of home loans, where the interest rate can vary year-to-year. This loan is very flexible and offers optional features for first home owners.
Fixed Rate Loans – these home loans are ideal for those looking to have a set loan repayment each month. These loans are usually based on a fixed rate for a certain period (usually five years) before they become variable.
Split Loans – more technical than the previous two, the split loan offers advantages from both the fixed loan and the variable loan.
Line of Credit Loans – also known as equity loans, line of credit loans offer high levels of flexibility. With this loan, the lender assigns you a credit limit secured against your property, instead of a regular mortgage.
There is a lot to think about when it comes to purchasing your very first property. You’ll be dealing with lenders, building inspectors, conveyancers, vendors and real estate agents. Be aware of your financial situation, any assets you have, and how much you can afford to borrow.
If you don’t have time or the interest to pore through every home loan option, talk to a mortgage broker. It is their job to narrow your choices down to loan products that will actually suit your needs.
