What to look for in a mortgage?
Breaking into the Australian real estate market involves a combination of factors, from finding the right home through to choosing a suitable real estate agent and securing the most suitable finance options for your particular needs. There are so many different things to consider, you'd be forgiven for feeling slightly overwhelmed - especially if you're a first-time buyer moving into the market.
Finding the right home loan is arguably the most important thing to pay close attention to. This is because you'll be making repayments on this for an extended period of time, so ensuring you have the right product for you and your future will help reduce the number of headaches that could potentially occur over the long term.
Consider what's below face value
One thing to keep in mind are the various facilities that can attach to a home loan product. Depending on your long-term goals for real estate, these facilities can make a huge difference to the way you can use money to interact with your home and the wider economic landscape.
If you're interested in simply owning and occupying your own home, looking into a fixed-rate home loan with a low interest rate could be the right thing for you to consider. No flashy attributes, just a simple and straightforward financial product that can be budgeted for and taken into account each pay cycle.
However, if you're interested in making your money work for you - either as an investor or someone with higher financial ambitions - it could be worth looking into some of the additions that can be applied to home loans in Australia.
For example, things like a redraw facility, an offset account, utilising your home equity for future investment and being able to make extra repayments could all help you make the most of your finances in the long term.
Keep an eye out for hidden costs
Furthermore, one of the things that often surprises people the most when securing a home loan is the number of unexpected costs that need to be paid. This can be an unpleasant surprise for unsuspecting buyers, so be sure to discuss these with your lender before committing to any one mortgage product.
Being aware of things like stamp duty payments, lenders mortgage insurance, the various legal fees, inspection costs and moving finances are all expenses that can end up quite high, depending on the way you approach the market.
Speaking with a financial expert about the options available to you and the best way to avoid getting caught with large fees should be a priority.
Have you thought about a split loan?
One of the most flexible products available to buyers these days is called a split home loan and allows buyers to experience the best part of both variable-rate and fixed-rate home loans. If you're unable to decide what type of mortgage to pursue, consider splitting your product between the two major types.
This gives you the chance to make the most of both markets - the security of a fixed-rate home loan coupled with the flexibility of a variable-rate mortgage. Being able to take advantage of low interest rates as well as the various facilities involved with these home loans can be a brilliant incentive to consider in the long run.
These mortgages are often pursued by those looking to spread their risk across the mortgage, allowing them to take advantage of different economic situations when the time arises. Get in touch with a financial expert to discuss whether this type of mortgage could be the right option for you to consider.
Image credit: Jeremy Brooks