There’s a lot of information out there about home loans. But where to start? We’ve got some tips to help you know your options when it comes to getting advice about home finance.
1. The choice is yours
There’s no one answer when it comes to where to go for home loan advice. A recent HomeStart survey showed that most first home buyers would start with talking to their current bank (29%), followed by visiting a home loan comparison website (20%), speaking with their parents (15%), and talking to someone who has just gone through the process (14%). Consider your loan options carefully. Your regular bank will be able to provide you with valuable information, however, they will only have their own home loans on offer. Keep this in mind when considering their advice and remember to seek information from multiple sources.
Understand the role of a mortgage broker. Mortgage brokers offer home buyers a variety of loan options from different lenders, as well as helping you select the best loan for your circumstances. The biggest advantage of using a broker is the wider choice available to you, and to have someone liaise with your home loan provider on your behalf. Brokers need to be accredited to write a specific lenders’ loan products – for example, if you think you know what loan you’re after, such as a HomeStart loan, make sure your broker is accredited to offer you that product. Often their services will be free, but make sure you’re aware of any costs involved.
3. Compare and contrast
You can visit a home loan comparison site to get a snapshot of different products in one place, to compare a selection of home loan products side-by-side and look at interest rates, fees, and features to work out the best deal. They also publish articles on mortgage tips, the latest economic issues and home loan news to keep you informed about the process. Just be aware that these types of sites may not include all of the loan options available to you.
4. Do the math
Using an online home loan calculator
is the most convenient way to generate an idea of how much you might be able to borrow, how much your deposit and upfront costs will be, and what your loan repayments could be for a particular house price, deposit size and home loan. Most lenders will have their own version, so you can compare deposit sizes, upfront costs and repayments required for various different loans.
5. Do your own research
Carry out your own research online. Government websites are valuable as they offer independent advice, such as the Australian Securities & Investments Commission’s MoneySmart
, which provides tips on buying a home and case studies of home buyers. RevenueSA
will also outline what First Home Owner Grants are currently available in South Australia.
6. Shared experiences
Chat to family and friends. Your parents may have already been through the home buying process and will have your best interests in mind. Speaking with friends about recent home buying experiences may provide you with a good insight into current market conditions and loan products.
7. What features suit you?
Not all home loans are the same. There are many loan options available to you and depending on your circumstances, some may be better suited to you than others. For example, while low interest rates may be appealing, offers such as low deposit loans and an alternative to Lenders’ Mortgage Insurance, may help to reduce your upfront costs and get you into your own home sooner. The more research you do, the better position you will be in to choose the most suitable home loan for your situation.