Your Home Loan - Before and After

Before getting a home loan

• Save a large deposit if you're buying a home. You can normally borrow up to 95% of the property price, but this will leave you paying more interest and having to pay lender's mortgage insurance. You'll be in a better position if you save over 20% for your deposit.
• Watch out for hidden costs with some packages. They may seem attractive but find out all the hidden costs i.e. monthly fees, establishment fees and other expenses.
• Introductory or honeymoon rates are a marketing tool for lenders. You'll receive a cheaper rate initially, but then loan will be switched to a higher interest rate after the honeymoon period is over.
• Don't be afraid of the smaller lenders. These lenders have brought competition into the marketplace and often their rates are a good reason to consider them.

After getting a home loan

• If your lender allows you to, make a repayment on the settlement date. Normally your first installment is due a month after settlement, but every little bit counts.
• Does it seem like your loan amount is not reducing after the first few years? Well you're probably right! By making minimum repayments you are paying your interest and not your principal. You can attack your capital by making additional repayments or depositing lump sums.
• Always keep up to date with your home loan, don't just make repayments on a regular basis. New products and rates are always changing, often it's wise to refinance and get a better deal (you need to take into consideration if your current lender will not penalise you for early exit).

Did You Know?