What are some of the things to keep in mind when shopping for a home loan?
1. The Type Of Home Loans Available In The Market
As a home buyer who is looking to purchase a home with the help of a home loan, one of the key thing to know is the types of home loans that are available and which one suits your current and future financial needs. Some of the most popular home loans in the market include:
Basic Home Loan – no frills loans usually with low interest rates and limited features. It may offer redraw facilities but limit you in case you want to make extra repayments and withdraw the money in the future.
Standard Home Loan – offers more flexibility than the basic loan but with higher interest rates.
2. Getting Different Home Loan Quotes from Lenders.
Comparing home loans from different lenders may feel like comparing oranges to apples. However, as you start off on a journey of owning your dream home, the first thing you need to do is get a good number of quotes from different lenders, both banks and non-bank lenders. This can be achieved through various means one of them being you talking to the lenders and getting direct quotes from them. If your time and schedule doesn’t allow it, you can opt to get the services of a mortgage broker. A mortgage broker usually has access to various lenders and can easily get you the information you need to help you compare the available home loan products. Another great way to spend less time and get all the details you need is to use a home loan calculator tool.
3. Take A Closer Look At The Fees And Loan Terms
Even though interest rates play a key role on how much you pay every month, there are other fees to watch out for before signing up with a specific lender for a home loan package. Some of the common fees include:
Lenders Mortgage Insurance (LMI) - This can apply in the event you are unable to raise the 20% deposit. Though its referred to as an insurance, it doesn’t ensure you as a borrower but rather protects the lender. Try your best to have a high deposit, for a small difference in the deposit can make a huge difference in your LMI.
Application Fees - Some lenders may charge an application fees, in such cases, try to negotiate for lower fees or if possible for the fees to be waived.
Break Costs - If you are opting for a fixed rate home loan, you may want to pay attention on how much it will cost you in the event of an exit.