When buying a home, there are many options – from choosing the beach to choosing the colour of the walls. One of the most important decisions when buying a home is choosing the right mortgage.
We have collected five main points to consider when choosing a mortgage:
Mortgage type: why take out a mortgage?
Loan Amount: What Is The Cost Of My Mortgage?
Fixed rate: which one to choose?
Mortgage Features: Do You Need a Flexible Mortgage?
Costs and Fees: How Much Does it Cost to Apply for a Mortgage?
Depending on the type of lender, there are loans for different places: If you have a small investment, there are low loan options. If you are buying a home for the first time, the first loan is the best place to start. Loans for the self-employed. If you are a permanent resident or Australian living overseas, a mortgage can help you buy a home. If you have lost your balance or missed certain credit card payments, you can choose from our bad credit areas for bad loans.
Each of these mortgages has specific eligibility criteria for your conditions.
Loan Amount The Loan to Value Ratio (LVR) is the percentage that you can borrow in relation to the value of the property you are buying. LVR is calculated by dividing the loan amount by the actual value of the purchased property. Most lenders consider LVR 80% or less to be low risk. If your LVR is over 80%, you have mortgage insurance (IMT). LMI fees can cost thousands of dollars. Fortunately, there are ways to reduce or avoid LMI costs altogether, for example:
Tip: Once you get your mortgage approved, you know what to borrow so you can start looking for homes within your price range.
Interest rate. The interest rate determines how much you want to pay back during the mortgage. Interest rate versus variable interest rate
With a fixed interest rate mortgage, you receive a fixed interest rate for a maximum period of five years. Now that you know what your income will be, budgeting is easy; however, fixed rate mortgages are less flexible. A variable interest rate loan offers a variable interest rate that varies depending on what the bank / lender has set. The main advantage of an adjustable interest rate loan is that when interest rates go down, your payments go up too.
Features of Mortgages Variable rate mortgages usually have various features that help you manage your mortgage and pay off your loan faster. These features include:
However, these features usually come at a price, which is a plus when you don’t use them at all.
Time to talk to a mortgage and finance broker at Ding Financial