Are you thinking about buying a new home? If so, you have no doubt thought about home loans. Purchasing a home is a very exciting but it can also be one of the most stressful purchases you will ever make because of the financing, the paperwork, and deciding what type of home loan you want to pursue.
The loans you qualify for will be determined by your credit score, your debt to income ratio, and how much you wish to place down on a new home. The most common loan is standard variable, fixed rate, and basic variable. All have their benefits, but depending on your situation will determine what you qualify for and which loan is right for you.
The standard variable home loan is very popular in Australia because it offers many advantages including your payments may drop if the interest rates fall, you save a lot of money when the rates are low, you can double your payments without penalty, and the additional payments may be withdrawn by you. In addition, this is the most flexible loan because you can pay off your loan principal with no penalties. The only drawback to this type of loan is that if the interests rates rise, so does your house payments.
The fixed rate construction loans are attractive because you always know what you payment is going to be, there is no variable from year to year. Therefore, if the interest is high, your payment do not increase, which makes budgeting your house payment much easier. The downside is there is less flexibility, such as making extra payments does not necessary shorten the loan note. The fix rate does expire, which can make your payments much higher.
The basic variable home loans offer a lower interest rate than the standard, which means the repayments are lower as well. If the interest drops, then your payment also drops and you can make extra payment without penalties. The downside is this has very little features and if the interest rates rise, your payments will increase.
The other types of home loans that may fit your situation including bad credit home loans, split home loans, low doc home loans, offset home loans, and non-conforming loans. In order to find the best loan for you and your family, it is best to make an appointment with your mortgage brokers, fill out the application, and then get the conditional approval. At this point, you can find out if there are any issues with your credit that needs you immediate attention. Once this is taken care of then you the valuation report is order by your mortgage brokers and unconditional approval on your home can be made.
Once you have the unconditional approval, you can begin looking at the construction loans that are right for you, your family, and your budget. While it can seem like a daunting process, in the end, you are a homeowner and quite pleased to being moving into your new home and creating memories.