10 Essential Tips to Help You Choose the Right Home Loan
Home loans are available in different forms. Hundreds of lenders offer introductory, fixed and variable rates, with interest-only or principal & interest repayment methods. Each lender offers fees and features which differ. There are a multitude of variations available to suit your individual needs.
If you are a first-time buyer, you have to go into the process with the proper knowledge. You need to know the terms of repayment and features of what will suit your circumstances. It is also important to know how to compare loans and where to look to get an overview of the market.
The golden rule for a first time buyer is to consider the whole package offered. It is detrimental to consider only one aspect in isolation. In the instance that a loan has a very low interest rate, chances are that the fee structure is high. Also, if there are lots of features attached to the loan, there will be higher interest rates.
Trying to select a mortgage that is suitable has become more and more difficult as the lending industry becomes competitive. Many competitive loans do not have any application fees. It is thus important to ensure the rate and ongoing fees are also competitive. Also ensure that there are no hidden fees such as settlement, valuation or legal fees.
You can equip yourself in choosing the right home loan by doing the following;
Structure is all important. To get the right loan, you should take up a loan that will accommodate your individual circumstances. A loan needs to be easily manageable, especially in the first year.
It is important to be armed with knowledge about repayments and features that will suit your circumstances.
Put into consideration the size of deposit you can afford.Lenders may provide 100% loan to value ratio without insurance however,there may be a higher interest rate or greater fees in the long run.
Ensure that you would be able to make additional repayments at no extra cost or make repayments through direct debit, ATM’s internet and phone banking.
It is important to consider whether you can re-fix your interest rate at no cost, or split your loan.
Choose the right lender.One way of doing this is by consulting a local lender or bank. Ask about how post-settlement issues are handled.
Ask the lenders about the total fees associated with the mortgage, and what fees are paid from beginning to end. Many people move out of their loan after either three or five years. It is of utmost importance that they set out all fees.
A comparison rate is very handy when understanding the true cost of a loan.A higher rate and a lower comparison rate could be a cheaper option to you in the long run. These comparison rates help consumers identify the true cost of a loan. It’s the rate that includes the interest rate as well as the fees and charges relating to a loan, reduced to a single percentage figure.
Get transparency. This means that you will need to make a loan transparent, and understand all the costs and benefits before choosing.
Consider a mortgage broker in the instance that you find the best deal without advice.