Buying a house is one of the biggest things you’ll ever do, and choosing the right home loan for your circumstances is incredibly important. You’ll need to take both your income, and the income of your significant other if you have one. You’ll also need to consider what would happen if one or both of you were unable to work, and how long you’d be able to pay the mortgage without working.
This is one of the main reasons why insurance is so crucial if you’re buying a house-because that way you have the knowledge and peace of mind that if you can’t work you will still be able to keep the roof over your head.
Probably the best way to figure out which loan is best for you, is to compare the terms of different lenders. Ask for facts sheets which will give you all of the information you need, and then spend some time doing the calculations and comparing the terms of each different lender, along with the fees and features.
The facts sheet will let you know the total amount you will be paying back over the life of the loan (including interest), as well as the repayment amounts, charges, and fees.
The majority of people take a principal and interest home loan, which means that you’re making payments against the amount borrowed, and paying interest. This loan is designed to be fully repaid over the life of the loan.
Credit providers will also usually offer a few different interest and principal loans, with a large range of features, including an offset account or a redraw facility. However, the more features your loan has, the more it is likely to cost. This type of loan is usually repaid over a period of time like 30 or 40 years.
There are also interest-only loans, which means that your repayments will only be covering the interest of the loan, and the actual amount you borrow won’t reduce unless you’re making extra repayments. Some people choose these types of loans because they’re flexible, particularly if they’re an investment property, although these loans are usually only interest-only for a period of time, and then you either need to repay the loan in full or increase your payments.
If you decide to build a new home you can take a construction loan, and you can then withdraw the funds as you receive all of the bills from your suppliers and trades people. However these loans also often require plans and permits. There are also loans if you’re renovating, and if you only need a small amount you can redraw the funds from your current home loan.
The most important thing to remember if you’re looking for a home loan is that you have plenty of options. For more information check out NPBS’ competitive Fixed Rate home loans, and talk to their helpful customer service staff for more advice.