Finding The Right Mortgage Loan
The word mortgage originated from a French word ‘mort’ (death) which means ‘agreement until death’.
A mortgage is a guarantee or pledge to repay the loan you borrow from the financial institution.
Choosing the right mortgage could make a difference of thousands of dollars in the long term and hence is getting complicated.
Some considerations in selecting the right one for you.
Fir for Purpose
First and foremost , consider the purpose of the loan. If you are a homebuyer intending to live in your property you will require a “home loan” while investors need a”residential investment loan”.
Structure of Loan
Then you need to consider the type of loan that best suit your interests
- Are you interested in the flexibility to pay off more than your scheduled payments or
- Pay at regular intervals thereby saving on interest expense
- A fixed interest rate or a variable one
- Any additional credit facility including home improvements or a car
- The tenure of the loan
Loan Features
Do your homework and analyze the features of several loan products.
Most of the banks will allow you to split your loan amount over more than one type of loan to meet your needs – this can be useful if part of your loan is for investment and you need to claim your interest payments as a tax deduction.
The following lists of features are typical of those offered by many loan products
Additional repayments: Making additional payments from your year end bonuses and save thousands of dollars and reduce the number of years off your loan
Credit facility: Rather than going to another banker for Home Improvement and Furnishings ,a credit facility on your loan increases the credit limit on your existing loan.
Consolidation of accounts: A single account that merges your transaction may simplify your banking and save you interest on your loan while every dollar working for you.
Income to loan account: By depositing all your income into your loan account you can save in interest calculated on your mortgage and still access cash or pay bills by setting up automatic transfers into other transaction accounts.
Mortgage offset: Links your mortgage with your transaction account so that every dollar in your transaction account offsets the interest calculated on your mortgage.
Parental Leave: Lets you to reduce your repayments by up to 50% for up to six months subject to the terms and conditions.
Portability: If you move house, this feature will allow you to keep the same loan. This may incur a fee but will still be less than establishing a new loan.
Repayment holiday: By building up extra funds in your loan account you can take a break from making regular repayments for as long as there are extra funds in your account to cover them.
Redraw: Allows you to have access to any additional payments you have made above the normal scheduled repayments
Refix: Allows you to enter into another fixed loan rate at the end of your current fixed rate period.
Long term expenses
Try to prioritize your preferred features in a loan and calculate the long term costs of the options you are considering. If you make the most of the features of the loan, will you save more than if you chose the loan without the features even though its interest rate is slightly lower? This may depend on how disciplined you are with budgeting, your family’s lifestyle and your future plans.
Resources
http://www.1exclusivehome.com
http://exclusivehome.blogspot.com
http://www.benzeneinternational.com
