Most people dream of owning a home one day. However, this vision becomes elusive because homes cost a significant amount of money. Home loans give you access to the capital required to own a house.
There are various kinds of home loans offered by banks today. These home loans include the following:
- Variable rate loans. This is a home loan where the interest moves according to the cash rates set by the Reserve Bank of Australia. As such, the interest can either increase or decrease.
- Fixed rate loans. These are home loans with a fixed interest. They are a preferable option if you think that the cash rates will move up.
- Combination home loans. The home loan is divided into variable rate and fixed rate.
- Bridging finance. This home loan allows you to buy a new home before selling your current home. During the bridging period, you will have two home loans. Some lenders only ask that you repay the original home loan until sell the property.
- Honeymoon loans. This is an arrangement where you pay lower interest during the first six to twelve months of the repayment period. After that, the interest reverts to standard rates.
- Low-doc loans. These are loans that require little or no documentation. They are ideal if you do not have income records. However, you will pay higher interests on the loan.
- Shared equity. This is a kind of loan where you pay little or no interest on a portion of the home loan. In return, the lender gets a portion of the property's appreciation.
If you would want to take a home loan, below are some helpful tips.
- Ensure that you get a good deal on the house. A conveniently located house is easy to sell. Besides, you will most probably sell it at a profit.
- Visit a few lenders and inquire as to their terms. Choose a lender with friendly terms. For instance, do not go for a lender with harsh penalties if you are late with repayments.
- When taking the home loan, ensure that you bargain the current interest rate offered by the bank. You can also ask your conveyancer or property lawyer to negotiate on your behalf.
- Choose a flexible repayment plan. Ensure that you have money to cater for other expenses even after making your loan repayments.
When taking up a home loan, decide what kind of home loan you want and ensure the property you purchase is lucrative. Also, make sure you get a good deal on the home loan.