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Home Loans Tips


Simple smart tips that make home buying easier

Purchasing a home is a major financial decision and involves a high degree of stress. However, there are several things you can do to smooth the process, and tip the odds in your favour.

Know the market
The first and most important thing to do is research the area you’re buying into. Don’t just browse newspaper and Internet property listings – get a real ‘feel’ for the area and the market. Walk the area thoroughly, attend lots of property viewings and auctions, talk to agents, and so on. The more informed your buying decision, the better it will be.

Do your figures
Before you begin looking for a property, not only should you know how much you can borrow, but also how much you would feel comfortable repaying. (And to know what precisely you’ll need to create a household budget.) Depending on your income and what you’re buying, you may be able to borrow as much as 97% of the property’s value or more. However, don’t forget you also need to consider the effect interest rate changes will have on your repayments.

Stay flexible
Interest rates and your own circumstances change over time. So the more flexible your home loan, the more likely you’ll be happy with it over the longer term. Some of the features to look for in a home loan include:

•   The option to change from a variable interest rate to fixed interest rate, or split the loan into both
•   The choice of principal and interest repayments or interest only payments
•   An offset account to help you save on interest costs and own your home sooner
•   The ability to make additional repayments when you have extra cash
•   The option to redraw your additional repayments if you need to
•   The choice of weekly, fortnightly or monthly repayments
•   The freedom to take your loan with you if you buy another property.

Claim the benefits
If you're buying your first home you may be eligible for the Federal Government's First Home Owners Grant. Most state governments also offer various means tested packages to assist first home buyers. Plus, you may be eligible for discounts on stamp duty, so it’s a good idea to check out all the options.

Check purchase costs
A common trap for first home buyers is to underestimate the total cost of purchasing a property. Be sure you check into each of the following:

•   Inspection costs
•   Legal costs
•   Stamp duty
•   Council and water rates
•   Set-up costs (e.g. the loan establishment fee)
•   Lender's Mortgage Insurance - if your Loan to Value Ratio is over 80% or over 60% for a Low Documentation Loan, you may need to pay this.

Arrange insurance
You’ll need to arrange for home insurance on the building as part of the home loan process. You should also consider contents insurance for when you move in. If you’re purchasing a home unit you’ll need to obtain a Certificate of Currency from the body corporate insurer to ensure the property is adequately covered.

It may all seem a lot to consider. But when the keys to your new property are finally handed over to you, it can make the outcome even more rewarding.

This information was provided by the Commonwealth Bank
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