What financial factors affect your home loan package?
Mon Dec 19 14:30:00 AEDT 2016
Home loan packages aren’t one size fits all. Even with the same lender, not everyone gets the same loan with the same conditions. Different packages are put together to suit your individual needs and financial circumstances.
We look at three important factors that will affect the final makeup of your home loan package. This will help you to understand how you can improve your chances of finding a rate that is affordable for you.
The state of your finances
If your finances aren’t in good shape, securing a mortgage could be more difficult and costly. After all, a mortgage is a loan that you’ll be paying off for many years to come, so lenders assess how risky it is to lend you money. A regular income and a good credit rating are important factors that lenders consider. Remember, the better your finances are, the lower your interest rate is likely to be.
The amount of your deposit
The more money you put down when you purchase a property, the less money you'll need to borrow, which means a lender may perceive lending money to you as less risky. Most lenders expect borrowers to have saved 10% of the purchase price, with many also offering loans for five per cent deposits, or even less. To lower your interest rates and pay much less over the life of your loan, try saving at least 10% for a deposit. Depending on your lender, the more you pay as a deposit, the lower your rate is likely to be.
The type of loan you take out
Lenders will often offer you either a fixed rate home loan, or a variable rate. A fixed rate means the interest rates will stay the same for a period of time (typically three or five years), whereas the rates on variable rate mortgages can fluctuate over time. Some people are more comfortable knowing exactly what they need to pay, while others are happy to ride the interest rate market.
Note that variable rate loans may offer more flexibility, allowing you to repay your loan more quickly. Fixed rate loans may attract penalties for extra payments, so check with your Choice Home Loans mortgage broker to make sure you get a loan that suits you.
Get the right advice
There are many factors that affect mortgage rates. Before applying for a home loan, talk to a Choice Home Loans mortgage broker. They’ll advise you on the best way to find the right home loan for your financial circumstances.
This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the articles is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).