HOME LOAN TIPS

 

ALWAYS MAKE A BUDGET

One of the first things you should do when you're starting to look at properties is work out what repayments you'll be able to afford - in other words, work out a monthly budget. Add up your total monthly income (after tax) including wages/salary, regular overtime, dividend/interest payments, rental income and any other sources of ongoing regular income. Then work out your average monthly expenses, including other loan repayments, credit card repayments, vehicle expenses, medical expenses and any other regular ongoing expenses. By subtracting your total monthly expenses from your total monthly income, you should get a rough idea of what level of repayments you may be able to afford.

 

GET A PRE-APPROVAL

The figure you came up with in your budget may not be the same as what a lender advises you are able to borrow. Different lenders use different ways to assess your optimal borrowing amount. The advantage of a no obligation pre-approval is that Absolute Financial Services can use the most suitable options to meet your individual needs and you can confidently look for your property knowing your budget range. Click here to see how much you can borrow.

 

BUILDING INSPECTIONS

Once you've found a property you're interested in, you need to ensure there are no surprises that are going to show up after settlement. Ensure your sale contract is subject to whatever inspections you think are necessary. A building inspection and a pest inspection is a must. You may also decide to get the property surveyed. If the inspections uncover any problems, you then have the option of backing out of the purchase, or negotiating with the vendor to either fix the problem or reduce the contract price.

 

WHAT DOCUMENTS DO I NEED FOR A HOME LOAN?

The documents you may be required to submit with your loan application will vary between lenders and also between different types of loans. It is always a good idea to have available as much supporting documentation as possible when you speak to your broker.

 

Personal Identity

• Drivers licence

• Birth certificate

• Passport

 

Expenses

• Rent payments

• Utility bills e.g. electricity and gas bills

• General living expenses (food, entertainment, living expenses etc.)

• Vehicle expenses (petrol, insurance, registration expenses etc.)

• Any other regular expenses (insurance, education etc.)

 

Assets

• Bank account statements

• Term deposit statements

• Managed fund statements

• Your most recent rates notice

• Statement of holding for any shares you own

• Superannuation statements

 

Property

• Your purchase contract

• A certificate of currency for your home insurance (naming the lender as an interested party)

• Fixed price building contract (for construction loans)

 

MAKE REPAYMENTS MORE OFTEN

One of the best ways to reduce your interest charges and pay off your loan faster is to make your repayments more frequent. Instead of making monthly repayments, aim to make them fortnightly. This helps in two ways, Firstly, as there are 26 fortnights in the year, you will actually end up making the equivalent of 13 monthly repayments. Secondly, as interest charges are generally calculated daily and accrued monthly, the more often you make payments during a month the lower the accrued interest will be. On a 25 year loan for $300,000, making fortnightly repayments would reduce your loan term by 4 or more years. Click here to find out what your repayments will be.

 

MAINTAIN YOUR REPAYMENTS WHEN RATES DROP

If you're lucky enough to see the interest rates drop while you're repaying a home loan, try to maintain your repayments at the level they were before the rate drop. The extra repayments will come directly off the principal loan amount, helping you pay off your loan sooner and reducing your total interest charges. Contact us to arrange a home loan health check.

 

MANAGE AND MONITOR YOUR LOAN WITH INTERNET BANKING

Most lenders today have internet banking facilities, allowing you to access your home loan details over the internet. At the very least you should be able to check your home loan amount and view your transactions (payments and interest charges). Some lenders may have other Internet Banking features, such as allowing you to make lump sum repayments or set up periodic repayments and view how far your payments are in advance.