If you want to buy a house what is the most important thing that you need when you go and buy the house? You are right there are several things that you need to focus on before you go and buy a house. The home loan is the most crucial one.
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Types of Home Loans in Australia
If you have applied to a home loan whether for a normal scheme or Stop Renting and Start Buying; it is vital that you quickly finish the home loan. First you have to know what types of home loans are there in Australia.
Bridging Loan
This loan makes it easier for the buyer to first sell the previous house to buy a new house. It is a short term loan that gives the buyer at least 6 months period to sell off the property they have.
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Construction Loans
If you want to buy a house but it is still under construction then this kind of home loan can be of great help. The money you receive is in instalments; you will receive the next instalment when the previous one dries out.
Variable vs. Fixed Loan
When you are applying for a fixed loan; one thing that you have to keep in mind that the interest rate is fixed. But invariably the rate can either increase or decrease according to the money exchange rate.
Interest Loans
Many of the borrowers prefer to apply for the interest-only loan because they have to repay only the interest set on it. But if you have a bad history of repaying then the lender will reject your application.
Line of Credit Loan
Like all other loans the amount is set. But the main difference is that as you repay the loan; you can again reuse the amount. It can be said that it is equal to the limit on credit cards.
Split Loan
Split or combined loan refers to a type in which the borrower has the liberty of splitting the amount into portions. One or two of the amount of the split can be fixed and others varied according to the convenience of the borrower.
Low-Doc Loans
If you are self-employed and are unable to show the source of your income then you are eligible to apply for this loan. Many of the professionals like Stop Renting Bunbury can help you with selection amongst these loans.
Cutting Down Home Loan Term with these Tips
If you are having trouble with ending the term of the loans mentioned above or you want to finish it before the term period; then you can adopt the following best tips to cut down the term.
Raise the amount of payment
The first thing that you can do is increase the repayment amount after a few months or when your income rises and you can afford to pay more. But this doesn’t mean that you upset your monthly budget.
Select the right kind of Loan
There are many kinds of home loans mentioned above and you must be tempted to apply for one of them. So get help from an expert in these matters and then select the right loan for yourself.
Increase the number of Payments
If the term period of the loan is said 10 years and you want to repay it as early as possible then one thing you can do is increase the number of payments. Whenever you get the chance of repaying use it so that the term can decrease.
Create an Off-Set Account
You can consider this as a helping account that is connected to your loan amount. Whatever amount is in that Offset account; that amount will be minus from the loan amount and interest will be on that money.
Deposit a Large Amount
Sometimes you get lucky and receive a big amount in the form of inheritance or profit from your business. It will be very wise to use that amount to pay off your loan lump sum.
Have a budget set
You have to know what you are spending regular and monthly basis. Always set a budget for the expenditures.
Combine Loans with High-interest Rate
If you are hurdling with multiple loans which have a high-interest rate then it is good that you combine them to make a single one.
Choose Lower term Period
Choose a loan that has a minimum term period. A long period always means the interest rate will be higher; so if the period is less and the payback amount is fine then apply for that loan.
Never miss a payment
The regularity of payment means that the loan amount will decrease gradually. But when you miss a payment; you increase the interest rate.
Select a Moderate House
If you can go for a moderate house for which you can apply less amount then don’t make the mistake of going for a higher price.
The Loan should be transferable
Many lenders provide the facility to the borrowers that if they transfer to another loan type then the same facilities are provided on that same.
You can also go for Stop Renting and Start Buying
Stop Renting and Start Buying can also be considered as you can pay monthly payments and at the end you have a clear choice to buy or not to buy.
