First time buyers will experience many emotions when buying a home. Most of them are positive but one of the most common emotions is often fear. Home loans in particular, can conjure up trepidation in most. It’s a long and expensive commitment and the pressure to choose the right home loan can be too much.
First home owners often seek the opinions of others and find they end up with a barrage of information from banks, brokers or family and friends, who all think they know best.
The truth of the matter is, choosing a home loan is one of the most important decisions you will make and the choices you make could be the difference between you and a saving of thousands.
The good news is, there are so many Australian home loans to choose from so you can find a great competitive home loan that’s right for you.
Get off to a great start and take note of a few common mistakes first home owners make:
Introductory rate home loans.
Most intro home loans offer lower interest rates, known as a honeymoon rate, usually for the first year. However at the end of this period the rate usually reverts to a much higher rate for the remainder of the loan so you may not save as much in the long term. For instance, let’s say you looked at an intro rate loan with an advertised rate of 5.94 percent for the first 12 months which reverts to a variable rate of 6.94 percent and compared it with a low variable rate loan of 6.29 percent. At the end of a 25 year loan for a $300,000 mortgage you could save yourself $32,933 with the lower rate loan.
Look at the features
Depending on what type of home loan you require and your circumstances will depend on what type of features you will need. Some loans come with a range of features that you may not use and that you could be paying extra for. Alternatively there could be features that you don’t have access to but need, so shop around and look for a home loan that offers the features that you will use.
Some examples of features that could be available include:
- Redraw facility
- Lump sum repayments
- Mortgage offset
- Mortgage portability
- Additional repayments
- Split option
Do your own research
Most certainly take on advice from others who have been there before but make sure you conduct your own research as everyone’s financial circumstances are different. What works for your uncle Bob may not work for your aunty Mary. Start comparing home loan rates and features with the RateCity home loan comparison tool. Get your head around your finances with the home loan repayment calculator. If you invest a little time in your own research it will pay off.