Buying a home is an exciting time, and a great start toward your future wellbeing. However, it’s important to be aware that you’ve also made a long term financial commitment which requires careful management to make sure you stay on track. Here are some questions to ask.
Can I meet my loan repayments?
It sounds basic, but it’s important to know how your repayments work so you’re prepared if they change.
Most standard loan repayments are set according to your loan term, the amount you’ve borrowed, and whether you’ve chosen to fix your interest rate or leave it variable. If you have a variable rate, your repayments will increase when interest rates go up and decrease when they go down.
offer a different option as repayments
are set initially according to your financial situation, and typically adjusted just once a year in-line with inflation. This means in most cases, no matter what happens with interest rates, your repayment amount will only change once every 12 months.
Can I avoid fees and charges?
It’s worth getting to know exactly what your lender charges for different services. Then you can take steps to avoiding paying them. For example, if your loan repayments are deducted by direct debit, make sure you always have enough money to cover them. That way, you won’t overdraw your account and potentially incur a late fee.
Another idea is to get online. It might be cheaper or even free for you to look at your loan statements online, access redraw or make extra repayments.
Can I cover the extra bills?
Buying a home is a great achievement, but keep in mind you may have a whole new set of costs to meet. It’s worth setting aside some money each pay to cover council rates, emergency levies and general house maintenance.
When it’s your own home, it’s also your own responsibility to fix broken hot water systems or faulty ovens, so it’s worth having something in the budget as a contingency plan.
It might not be the most fun part of being a home owner, but knowing how to manage your repayments will put you in a good position to achieving your goal – paying that loan off in full!