Should I fix my mortgage or keep it floating? Or should I stay with my bank or switch?
With ever changing home loan market, finding the most suitable and accurate information from an unbiased source about home loan is very difficult. It gets more confusing when you visit different banks and every bank says that their product suits you best. With so much information, how do you decide which loan suits you and meets your requirements?
Never before has it been more important to find a home loan that is not only right for you right now, but one that will also be right for you in the years to come. Buying a home is a major financial investment that should be taken seriously and heavily researched. Finding a home loan that will accommodate your home ownership needs and save you money can be a challenging task for most. But at ESMA Home Loans (Australia), we have years of experience in providing existing and potential home owners the best loan solutions.
Your mortgage broker or financial advisor should provide unbiased information in an easy to understand way: how much can I borrow? what will be my stamp duty costs? what are my options when my family is growing and when we need to buy a bigger house?
This makes it so much easier for people unsure about their current mortgage and financial situation along with first home buyers looking for the right information to get their first home buying experience underway.
Whether it’s your home loan for your first house, refinancing, buying an investment property or using your home’s equity to renovate or extend, you must shop around for best interest rates and best terms.
Talking to an expert can give you a clear, easy to understand description of your personal home loan to business loan options. Here are some of the common questions I am asked.
Do I need a deposit to buy my first home?
Yes. Most Australian banks have scaled back the availability of no deposit home loans and 100% home loans. However, with growing competition among banks and financial institutions it may be possible to buy your first home without a substantial deposit. Some banks even allow you to put the funds from your First Home Owner Grant toward paying fees and charges associated with your home purchase. The best way to check if you’re able to begin searching for your first home is to contact a professional mortgage broker.
How do I negotiate the lowest interest rate on my home loan?
There are rules that apply to everything in life and that includes mortgage rates. It’s not enough to simply want to secure the best mortgage rates; you have to know what factors affect the mortgage rates you receive and what you can do to improve your chances of finding a rate that is affordable for you.
If your finances are not solid then securing a mortgage will be difficult and costly. After all, a mortgage is a loan, a loan that will be paid for many years to come. Would you risk lending thousands of dollars to someone who can’t prove their financial security? Both your income and your credit rating are taken into consideration when you get a mortgage loan and both will need to be moderate to high.
Remember, the higher your financial rating is the lower the interest rate you are offered will be.
The more money you put down, the less money you’ll need to borrow, and the less risky lending money to you will be perceived by the lender.
The economy and housing market in particular will have a direct effect on the mortgage rates you receive. If the economy is doing well you should be able to secure good interest rates, but rates often tend to be even better when the economy is on a decline.
These are just a handful of the factors that affect the mortgage rates you will be quoted if you are seeking a mortgage home loan. Being aware of them even before you begin searching for a home can help you get mortgage rates that are fair and affordable.
Should I fix my interest rate or keep it on floating?
If you decide to fix your home loan, you should be focussed on achieving certainty in terms of your monthly loan repayment rather than hoping to gain from future interest rate movements. This type of certainty can be important if you have a limited income or are an investor. For someone who wants to combine ‘certainty’ and ‘flexibility’, a split loan may be a good option. This allows you to fix part of your loan and keep part of it at a variable rate.
Sukhwinder Rajput (JP), is a director of ESMA Home Loans in Australia. This article is for guidance only, and should not be considered professional advice. Please consult your financial advisor. The Global Indian magazine or ESMA Home Loans will not be liable for any financial loss.