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Buying your first home is one of (if not) the biggest financial commitments you will ever make. It is vital to stay well informed of what is involved so you don’t make any rash decisions.
Good financial planning and loan advice can save thousands of dollars off your loan and help you own your home sooner! Whether you need a home or investment loan, Verve Group has access to a superior panel of approved lenders who can offer competitive quotes and products to meet your specific financial needs.
Home Loans
Key considerations
Tips to pay off your home loan faster
Fixed or variable interest?
Hidden home loan costs
Home Insurance tips
Key Considerations
Can you afford to buy a house?
A credit provider must ensure you can afford to repay a loan without suffering undue financial hardship before lending you any money.
The total amount that you can borrow is determined by three factors:
The value of the property you intend to purchase;
The funds you use towards the purchase; and
Your borrowing capacity or “serviceability”.Serviceability is your ability to meet loan repayments, and will depend on your income and existing financial commitments.You will need to provide evidence of a continuous stable income.
You must have a budget!
Budgeting your income carefully and understanding your spending habits will help you make regular loan repayments and own your home that much sooner!
Tips to pay off your home loan faster
Select a home loan that meets your needs.While the rate is important, it is more important to have an appropriate level of flexibility and function.
Pay off as much as you can, as often as you can.
Avoid loans that penalise you for making extra repayments.
Avoid ‘honeymoon’ loans that revert to a higher rate after the ‘honeymoon’ period is over.
Avoid loans with high exit costs.
Deal with reputable organisations.
Fixed or variable interest?
This really depends on your current financial situation.We can help you select the right type of loan, building in the cost of every-day living to determine how much you can afford to repay each month.
There are advantages and disadvantages of choosing fixed and variable interest loans, and they are assessed on a per client basis.
Verve Group can help you select the best solution for you from the following:
fixed interest loan;
variable interest loan; or a
loan comprising of part-fixed / part-variable interest.
Remember however, that if you elect to split your loan into part fixed / part variable, make sure you don’t incur two monthly loan maintenance fees instead of one.
Hidden home loan costs
There are many costs associated with taking out a home loan, which don’t relate to the price of the property.
These hidden costs include:
Lenders’ fees, including loan application and establishment fees;
Government charges including stamp duty on property purchase and mortgage, and title fees;
Legal expenses; and
Inspection costs.
Home Insurance Tips
Lender’s mortgage insurance
If you can’t repay your loan, the lender repossesses your house and sells it to repay the loan.If the sale of your house doesn’t cover what you’ve borrowed and an amount is still owed, lender’s mortgage insurance will cover the gap.Lender’s mortgage insurance covers the lender, not you!
If you need to borrow more than 80 percent of the total value of your property, most lenders will require you to pay lender’s mortgage insurance.It is usually charged as a one-off premium payment.The higher the percentage borrowed, the higher the lender’s mortgage insurance premium will be.
Mortgage protection insurance
Mortgage protection insurance covers your loan repayments in the event that you are unable to make them.
Verve Group does not recommend mortgage protection insurance because it only covers your loan repayments.According to our research, in most cases, income protection insurance is much better value.Income protection insurance provides up to 75% of your salary in the event that you are unable to work and covers all your expenses – not just your loan payments.
Home and contents insurance
Home and contents insurance protects you from loss or damage to your home or possessions.The cost of insuring your home depends on many things, including the structure, the location and the existing security (security doors, alarm etc).
Home insurance covers the building only – not the land.Contents insurance covers your possessions listed in the policy.
If you have a mortgage on a property, building insurance is compulsory.Contents insurance is not compulsory, although it is generally a good idea and should be reviewed each year as you purchase new contents for your home.
If you are looking to purchase a home, talking to a mortgage broker can help you to get on the right track. Contact Verve Group Finance today on (08) 8120 4877 or email: finance@vervegroup.com.au