What is a Home Loan?
A mortgage or home loan is a amount of money that an individual borrows from banks or other lending companies. The loan amount must be repaid along with interest in easy monthly installments or EMIs. This can take between 10 and 30 years, depending on the loan’s nature.
It is no secret that Australia’s Government is tightening its belt in the financial sector. The Royal Commission, which took no prisoners (especially among the Big Banks), has made this clear.
Lenders are now under increasing pressure to adhere to ASIC regulations. This could make it more difficult for borrowers to obtain a loan.
While it’s good that lenders are being more scrutinized, it could also mean that conditions for securing loans could change.
Tips to Get the Best Home Loan
Your credit score. Before you consider your options for home purchase, it is important to check your credit score. Your credit score can impact how many loans you are eligible for, the amount of money you can borrow, and your interest rates.
Establish a budget. To determine the amount of house you can afford, use a mortgage calculator. Stick to your budget. Keep in mind the cost of property taxes, homeowner’s insurance, maintenance, furniture, and utilities. LearnVest suggests that you take 20% of the maximum amount approved to ensure you have the funds to cover the additional costs associated with home ownership.
Learn about your loan options. Before you apply for a loan, it is important to understand your options. This will help you make the right decision about the type of loan you want. These are some types of mortgage loans:
- Fixed-rate mortgages
- Mortgages at adjustable rates
- Government loans
- Construction loans
- Proffessional loans
Compare all the options. You don’t need to choose the first lender when shopping for a mortgage. One lender might offer a better rate than another. Local community banks such as First Bank are likely to offer the best rates and customer service for all of their lending options.
Prep your documents. Before you meet with a lender, find out which documents are required to apply for a mortgage. Typically, required documents include:
- Credit report
- Returns on taxes
- Pay stubs
- There are two types of ID
- Photo of the current property
MakesCents Compare home loans more than 25 lenders in one place. It takes less than 60 seconds to get started. It’s free and obligation-free, so it won’t affect your credit rating.