You have now found the perfect home to purchase but now you need funding.
Choosing the right lender is probably the single most important decision you will have to make. We have therefore compiled these tips based on advice from home loan experts.
Types of home loans
Look for a home loan provider that offers you a number of different types of home loans. This gives you more flexibility when it comes to making an investment decision, which is a financial obligation that will be around for years to come.
Different types of home loans include basic, standard or home loan packages.
Fixed or variable interest rates
Determining whether you would like a fixed or variable interest rate is another big decision that you will need to make.
Ensure that you speak to your property broker or home loan lender in order for you to make the best suited choice for your financial situation. If you will not be able to afford a higher interest rate with the variable interest option, you should consider the fixed interest rate on home loans.
Consider the additional fees involved
The interest is the only amount you will be paying over and above the actual purchase price. The additional fees will largely determine the lender you choose to use. Here are some additional fees you could expect to pay:
- Application fees
- Legal fees
- Valuation fees
- Monthly or annual fees
Desirable features to look for choosing a home loan lender:
If you are able to make extra repayments, it will benefit you greatly, financially.
Some lenders allow you to redraw the additional repayments that have been made. It allows you to store your savings in your mortgage loan.
Pay interest only
There are lenders that offer a ‘pay interest only’ feature. It is usually available for up to five years. It is a feature that you might not find at most standard lenders.
It allows you to save on the amount of interest you are paying as you lower the principle amount and therefore, the interest charged, is less.
The repayment holiday feature allows you to take a break from your repayments in particular situations, for example, if you have had a baby.
Using these expert tips as a first-time buyer will assist you to buy your dream home but with the added benefits of the right lender.