So, you’re looking at buying a new home. Maybe it’s an upgrade. Or, like many astute Aussies, an investment. With home loan rates at such favourably low levels, buying property now makes a lot of sense. But remember to keep a level head about things. Do your research, seek good advice, and spend time selecting the loan that really suits you. Follow these edicts to set yourself up for success!
Why exactly are you buying?
It sounds simple, but it’s a question you need to ask yourself. Are you in a solid position to be stretching to a property purchase right now? Be honest. If you’re not, it’s better to wait until you’ve got better resources and planning behind you. Think with your head, not with your heart.
Are you upsizing, or downsizing? Are you moving to a new location to better suit your needs – if yes, is this really the right move? If you’re starting over and buying somewhere new, are you sure you shouldn’t consider renovating your existing place instead?
Try thinking of it in terms of starting a new business. You’d have to come up with a business plan; thinking through risk versus reward. So, what’s your ‘property plan’? It’s the same concept. Think things through diligently, before being swept up in emotion and taking irreversible leaps of faith.
Are you “credit fit” in the eyes of a lender
How creditworthy are you? Have you checked recently? To avoid any nasty shocks upon application, make sure your credit score is in good order. Sometimes, the difference between being eligible for a home loan or not can rely on your credit score, so be sure when you are applying you are putting your best foot forward. You can check your credit score by going to a credit reporting body or an intermediary like getcreditscore.com.au or clearscore.com.au.
Equity is your friend…
If you own an existing property, chances are you’ve seen its value rise in recent times. This is great news if you’re looking to leverage that extra value to purchase additional properties, or to refinance and make some other home improvements.
Using the existing equity in a home is a smart move which has helped millions of Australians build their wealth through property investment. If you’re already on the ladder, you’re in the right place.
…but hidden costs are the hidden enemy
Whichever home loan you end up going with, you need to be completely across the fees and charges you may be up for. The truth is, sometimes there’s not as much transparency as you may like about these. And sadly, these can stack up and eat into any savings you may think you’re making via good interest rates.
So, do your research. Ask the tough questions. Check the comparison rates along with the headline interest rates. Read through the fine print and write down all the fees and charges. Then add them up to see how much you’ll actually be outlaying each year. And don’t forget the big one – stamp duty. To learn more about comparison rates and why they are a better indicator of the true cost of the loan, read our article on the difference between interest and comparison rates.
Remember, it’s your home loan and it’s your property a potential lender is dealing with. So, make them work for it. They shouldn’t be charging you any additional hidden or additional fees. (And just as a reminder – Nano does not charge any Nano fees. Only government charges apply. That’s why you’ll find that our comparison rates are always the same or lower).
How much can you borrow?
The simple rule here is: don’t borrow more than you can afford. And, be realistic about your future plans and lifestyle. Are you looking forward to retirement? Do you have years of private school fees to consider? How do you want to live – are you prepared to forego certain things (like expensive holidays), or not? Conversely, you may have good changes ahead of you – like no longer having to pay school fees.
Your best home loan will evolve from research and careful consideration
There’s no ‘one size fits all’. You have to do your research to pick the right home loan for you and your individual circumstances. A few critical things to consider:
- Do you want a fixed or a variable rate?
- Do you want principal and interest, or a period of interest-only?
- Will you have an offset sub-account for everyday transactions and a way to reduce the interest you pay on the loan but still have access to funds?
- Finally – your actual interest rate. How well can you do on this? As always, shop around.
Want to start making a smart money move? If you have any questions about getting the best home loan for you contact Nano Customer Support.