Perth, WA - Home loans can be confusing for anybody but especially for Australians buying their first home. Perth home builder First Home Owners Centre has an in-house finance team experienced with the ins and outs of mortgages and explains their top five tips for getting an affordable home loan.
Save For a Down Deposit
Saving more for the deposit up front is always a good decision for first home buyers. Paying at least 20% up front will eliminate costly Lenders Mortgage Insurance (LMI), potentially saving thousands of dollars. In addition, money spent up front decreases the balance on which interest is calculated. A lower principal means lower monthly payments initially and significant savings compounded over time.
Budget and Plan Accordingly
Homeowners would be wise to do a thorough of their financial situation and make a solid figure on what they can realistically afford. Once a budget has been set, other decisions such as which neighbourhood to choose or what design to go for can be made. It can be tempting to splurge on a home, but due to the nature of compound interest, it’s generally best for prospective homeowners to buy within their means.
Get Pre Approval
One of the best ways for home buyers to get a handle on what they can afford to borrow is to get a pre-approval from their lender. Many lenders offer quick pre approvals which take just a few minutes and give a rough idea of what can be borrowed.
Some lenders offer very thorough pre-approvals which take longer but ensure the loan amount is there when the time comes. In either case, home buyers will get a good idea of how much they can borrow on their home loan
Open an Offset Account
Home loans these days aren’t simple basic loans but often have features such as redraw facilities, offset savings accounts, line of credit, and other features designed to offer flexibility. Perhaps the most popular feature is an offset account.
An offset account is a savings account where the parked balance offsets the principal on the mortgage against which monthly interest payments are calculated. However, the balance in the offset account can still be accessed like a regular savings account, allowing homeowners to decrease their monthly payments easily yet still have access to emergency funds.
Get a Construction Loan
One of the financial conundrums of building a home is the limbo period when the home is constructed when owners are making monthly payments on a house that isn’t actually built yet. No one wants to be paying interest on a something that doesn’t exist.
Construction or building loans solve this issue. A temporary interest-only loan, construction loans can reduce monthly payments while the property is being built. As construction proceeds, funds are released, and when the house is completed the construction loan converts to a regular home loan.
About First Home Owners Centre
FHOC is the First Home Owners division of HIA award winner Aveling Homes, one of Western Australia’s most quality focused building companies. What this means for you is that above all else, quality and affordability is what you will experience when you choose FHOC.
Visit the FHOC website at http://www.fhoc.com.au for more details about our services and available financing options for first time home buyers.
First Home Owners Centre Contact Information
24/7 Sales Enquiry line: (08) 6144 1088
Email: [email protected]