Buying a home for the first time can be daunting, especially when it comes to choosing a home loan. At Otelta, we can help you find the right loan with our unique combination of people and technology. Otelta makes borrowing faster and easier, while giving you the personalised service you deserve.
To help you get started consider these eight factors when applying for a home loan.
How much can you afford to borrow?
The first step is to work out how much you can borrow. Look at your income and all expenses, debts, regular bills to work out how much you can put towards a home loan. Most lenders will base the size of your home loan on your capacity to meet the repayments. Repayment should not exceed 30% of your pre tax income. Use our calculator to find out how much you can borrow.
Savings history – Lenders require proof of savings history in the form of bank statements that show regular deposits. You will need at least the last six months’ statements, which should add up to at least the 5% minimum deposit.
Types of home loans – In today’s competitive market, finding the right loan can be a complicated, drawn out process. What may be suitable for one person may be inappropriate for another. To help simplify the process, familiarise yourself with what’s available. Also take into consideration your goals and financial circumstances.
First home owners grant – If you have never owned a home before, you may be eligible for the Federal Government’s First Home Owners scheme. This one-off tax free payment of $7,000 can be used to help fund your additional expenses or in some cases may be used a deposit. Various state government schemes may also be available so check with your relevant State Revenue Office.
Stamp duty – Stamp duty is a state government tax based on a property’s selling price. First home buyers in some states may be entitled to a reduction in stamp duty costs.
Lenders mortgage insurance (LMI) – If you borrow more than 80% of the property’s value, you will probably have to pay lender’s mortgage insurance. This insurance protects the lender should you default on the loan.
Additional costs – Apart from stamp duty and LMI, there are a number of additional expenses you need to take into account when buying a home. Costs include loan application fees, solicitor/conveyancing fees, building/council inspection, pest inspection, home and contents insurance, moving expenses and utilities connections.
Refinancing is when you apply for a secured loan in order to pay off another different loan secured against the same assets, property etc. Refiancing can help when you are searching for a new loan at a more favorable interest rate.
When is Refinancing an Option?
Typically home refinancing is done when you have a mortgage on your home and apply to pay off the first one. While taking the decision to go for the home refinancing option, it is important to first determine whether the amount you save on interest balances the amount of fees payable during refinancing.
Benefits of Home Refinancing
Imagine a scenario where you can have access to extra cash, while simultaneously lowering your monthly mortgage payment. This dream can become a reality through mortgage refinancing.
A house is the largest asset you may ever own. Likewise, your mortgage payment may be the largest expense you\’ll have in your monthly budget. Wouldn\’t it be great to use this asset to reduce your monthly payment and put extra cash in your pocket? When you refinance your mortgage, you can take advantage of the equity in your home and enable this to take place.
Lower Refinance Rate, Lower Payments
When you purchased your dream home, the financial environment dictated. While certain factors, like your credit rating and the amount of the down payment that you were able to afford, influenced your interest rate, the single most important factor was the prevailing rates at that moment. However, interest rates fluctuate. When the Federal Reserve enters a rate-cutting period, the prevailing rates may become significantly lower than when you originally purchased your home.
By refinancing your mortgage when interest rates are lower, you can exchange a higher interest rate for a lower one, which, in turn, will lower your monthly payment.
If you are currently in a tricky situation with your finances and juggling payments to more than one lender, you are not alone. Britain as a nation owes over £1 trillion. But rather than trying to pay off the minimum amount for each debt, a debt consolidation loan could reduce your debt to one manageable monthly payment. However, you need to look at all of the relevant issues as a debt consolidation loan may not be right or available for you.
What is a consolidation loan?
In its simplest terms, a debt consolidation loan will pay off your existing debts and transfer the monies owed into one loan with one manageable, monthly repayment. You will still have to pay back all the monies owed, but with a debt consolidation loan you may be able to reduce your monthly outgoings, pay a lower rate of interest, or be able to spread the costs out over a longer time period.
If you are careful about managing your spending, a debt consolidation loan can help by:
Reducing your monthly payments
By spreading out the term of the debt, you will often be able to reduce your monthly repayments to a manageable level. Most people are often paying the ‘minimum payment’ allowed on the existing debts. This often just means covering the interest component of the loan while leaving the actual total amount owed unchanged.
Improve your credit rating
If you are able to pay off the loan and accrue no further debt, this will be seen as a positive impact on your credit rating.
Reduce the interest you pay
If your debts are with store or credit cards that have a high interest rate, then you will generally pay back less interest on your debt with a loan. Make sure you stop spending on your cards though.
Moving forward in the present market is essential. Investing in Australasia and abroad is one key component. Markets change and sustainability is assessed through different means. Something that might have been a good idea 5-10 years ago is not so now. This can be looked both ways of course as times change and so do markets. Something that might have been a bad idea 5-10 years ago may now be a good idea today. Intelligence and understanding of key market trends is a major factor in current investment and acquisition processes.
Future and past processes may change as time progresses but principles undoubtably can stay the same. Realty is reality, realty in all different forms. Analysing properties is a major factor when assesing realty and financial intellagence is critical here. Have a plan & plan ahead and be prepared for market fluctuations.