Getting Home Loans? Consider this
Getting the right home loans that fit your unique circumstance is no easy feat. This myriad of obstacles often confuse people from getting the best one.
But help is available to anyone who is considering getting a home loan anytime soon. Starting with the right mindset and attitude toward borrowing is the right place along with resourcefulness in sourcing well-informed information from the right sources.
Interest rates do matter
According to the government website SmartMoney.gov.au, interest rates matter the most when shopping for a home loan. Since home loan is a long term commitment, choosing the best interest rate can make or break your borrowing experience.
ALSO READ: Owner occupied Home Loans Vs. Investment Home Loans
Generally, home loans can take from anywhere between 20 to 30 years, so locking in on a high interest rate loan despite having waived fees can be burdensome in most cases.
That is why expert lenders would usually advise would-be borrowers to cherry-pick loan products that are low on interest rates rather than packed with waived fees, yet associated with high rates.
Types of home loans
In terms of associated costs, there are two general types of home loans - principal + interest loans and interest-only loans.
Again, borrowers should be cautious when selecting a home loan product based solely on whether one is paying only the principal amount or not (with interest).
The first type, principal + interest, is the most common type of home loans. In this scenario, the borrower has to pay the principal amount of the gross amount borrowed plus the interest rates.
ALSO READ: Other Home Loans Options Worth Considering
The interest rates usually vary depending on the specific type of loan availed. There are loans where the interest rate is fixed throughout the lifetime of the loan, while there are those that are fixed for a period of time then will revert to a varying rate based on prevailing rate, among others.
The second one, the principal-only, can sometimes confuse and mislead unsuspecting borrowers. This loan type is actually a misnomer as the borrower is not actually paying only the principal amount.
In this case, the borrower is actually paying a certain amount for a fixed period of time solely to cover the interest of the owed amount. The period could range from 3 to 5 years. So basically, for the entire duration of that period, the borrower isn’t paying the actual borrowed amount just yet, but only the interest.
Ultimately, choosing the right home loans can be a taxing job for many. But since this is a major and long-term commitment, it is worth all the trouble.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane, where he specialises in owner builder loans. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today. Like and follow them on their Twitter and Facebook accounts.
But help is available to anyone who is considering getting a home loan anytime soon. Starting with the right mindset and attitude toward borrowing is the right place along with resourcefulness in sourcing well-informed information from the right sources.
Interest rates do matter
According to the government website SmartMoney.gov.au, interest rates matter the most when shopping for a home loan. Since home loan is a long term commitment, choosing the best interest rate can make or break your borrowing experience.
ALSO READ: Owner occupied Home Loans Vs. Investment Home Loans
Generally, home loans can take from anywhere between 20 to 30 years, so locking in on a high interest rate loan despite having waived fees can be burdensome in most cases.
That is why expert lenders would usually advise would-be borrowers to cherry-pick loan products that are low on interest rates rather than packed with waived fees, yet associated with high rates.
Types of home loans
In terms of associated costs, there are two general types of home loans - principal + interest loans and interest-only loans.
Again, borrowers should be cautious when selecting a home loan product based solely on whether one is paying only the principal amount or not (with interest).
The first type, principal + interest, is the most common type of home loans. In this scenario, the borrower has to pay the principal amount of the gross amount borrowed plus the interest rates.
ALSO READ: Other Home Loans Options Worth Considering
The interest rates usually vary depending on the specific type of loan availed. There are loans where the interest rate is fixed throughout the lifetime of the loan, while there are those that are fixed for a period of time then will revert to a varying rate based on prevailing rate, among others.
The second one, the principal-only, can sometimes confuse and mislead unsuspecting borrowers. This loan type is actually a misnomer as the borrower is not actually paying only the principal amount.
In this case, the borrower is actually paying a certain amount for a fixed period of time solely to cover the interest of the owed amount. The period could range from 3 to 5 years. So basically, for the entire duration of that period, the borrower isn’t paying the actual borrowed amount just yet, but only the interest.
Ultimately, choosing the right home loans can be a taxing job for many. But since this is a major and long-term commitment, it is worth all the trouble.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane, where he specialises in owner builder loans. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today. Like and follow them on their Twitter and Facebook accounts.
