Purchasing a new home can become an exciting yet stressful process. Before plunging into the “house hunting” pool, it is best to choose the right home loan. It will guarantee that you’re getting the best value and deal that best fits your mortgage needs. This will lessen the stress of the home-buying process and make it much more exciting.

Common Home Loan Products

You want to get the best value out of the loan. Find one that will fit your lifestyle. The size of the loan should also be put into consideration as well as the deposit you can make and type of property you want to finance.

These are common groupings of Home Loan Products:

√  Standard Variable Loans – most popular type. Rates may go up and down during life of loan.
√  Basic Variable Loan – lower interest rates.
√  Discount Variable, Honeymoon, Introductory loans – variable rate loans with a discounted interest rate. Usually lasting a certain period of time.
√  Fixed Rate Loans – borrower’s interest rate and repayments are fixed for a certain period of time.
√  Combination/Split Loans – allows borrowers to split part of their loan as a variable rate loan and other part as a fixed-rate loan.
√  Line of Credit/Equity Loans – Borrower can borrow up to specified limit, which is secured by a mortgage over a residential property.

Steps To Take When Choosing A Home Loan

Step 1:

Know what costs are involved in buying a home or getting a loan.

Step 2:

Know how much money you can borrow. It’s best to consult a mortgage broker as lenders calculate Maximum Borrowing Capacity differently.

Step 3:

Know which documents are necessary when applying for a loan i.e. bank statements, driver’s license etc.

Step 4:

Know your Credit Report Profile. Keep track of your credit rating. It is a determining factor of what kind of loan you will be eligible for.

Also, Property Valuations is an assessment of the property as a saleable asset.  The lender is assessing the risk, which tells them if you able to pay the loan.

All of these criteria affect interest rates, which determine what home loan product will be offered to you.

All in all, choosing the right home loan feature along with a good interest rate will allow you to save money, making it easier to rapidly pay off your mortgage.

If you’re ready to speak to someone in the know, call Excellence Finance today at 9609 4655.