A Step-By-Step Guide To Home Loans
Your first home will be one of the most thrilling – and definitely one of the biggest – purchases you’ll ever make. There are some things you need to take into consideration to ensure you don’t bite off more than you can chew.
How Much Can You Afford?
Before you start taking a look at all the properties in the real estate section of the paper and circling the ones you really like, it’s important to take stock of your financial well-being and find out how much you can afford to borrow for your home loan.
There are many great budget and home loan calculators out there today. Check out the calculator at Money Smart. Tools such as this will help to provide an indication of how much you will be able to borrow from a bank or financial institution. The price of the property itself will be the biggest cost, however there are also many other associated fees, such as stamp duty, legal fees as well as home and contents insurance, so keep these in mind.
Will this be your first home? Congratulations! You may be able to claim the Federal Government’s First Home Owner Grant. This will help to make your first home purchase a little smoother.
Let’s Go Shopping
You now know what sort of repayments you will be able to make. It’s time to go shopping! Home loan shopping, that is. Take your time picking the best home loan. There are many different mortgage options out there and they are coming from many different lenders.
Enlisting the talents of a mortgage broker may help to streamline the process a little. A mortgage broker will have information and contacts from many different banks and financial institutions. They know all the mortgage lingo and legal requirements and, as they do this sort of thing every working day, they will be able to answer all – or, if not, most! – of your questions. However, it pays to do your homework and find a reputable broker. Working with an unscrupulous mortgage broker who decides to take a few short cuts – whether you’re aware of them doing so or not – could catch up with you and the consequences could be disastrous one day down the track. Do your homework.
Before You Sign On The Dotted Line
Read, re-read and read the fine print of the agreement again before you sign. No one likes surprises, especially when it comes to your home loan, such as unexpected costs that may pop up. Your eyes may glaze over at the term “credit contract” but it is essential you know exactly what you are getting yourself in for. Be sure you’re aware of all the costs and fees you will have to pay and know exactly what your repayment schedule looks like. Unlicensed home loan providers and mortgage brokers are illegal in Australia – but that does not stop some of them from operating.
ASIC has a Professional Registers page that will make a good starting point. Make sure the bank or company lending you the money is licensed.
Making Sure Your Home Stays Sweet
You will no doubt know how much your repayments are and how often you have to make them. If you are experiencing financial hardship and are having trouble meeting your home loan commitments, ask for help as soon as you can. Putting off the problem can often make it worse. Speak to your bank about refinancing or any advice that they can provide. Debt consolidation and management companies do exist that can help people in this situation.
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