Sometimes getting a home loan can seem daunting since there are so many financial factors that have to be taken into consideration. It’s not just about how much money you have or even how much money you are earning, it’s something you will have to deal with and make repayments on for the foreseeable future –and you definitely want to answer some questions before you get started.

Aside from all the obvious questions like “how much should I borrow” or “what type of home loan is right for me”, something people often don’t consider is their marital status. Nobody wants to think something bad might happen further down the line, but being prepared for the worst is always to your advantage.

So Before You Get A Home Loan, Ask Yourself: Should I Get A Pre-Nup First?

Prenuptial agreements can be seen as a sign that a couple doesn’t trust each other, or are worried about their partners finances – but the fact is that they are just common sense. You never know where you might be in 5, 10, 15 years down the track and you don’t want to be paying for a mistake you made way back when. That’s why asking your partner about a prenuptial agreement isn’t an insult, it’s looking out for both of your best interests.

This is especially true in the case of a homeloan. If you are borrowing a large sum of money either as a couple or as a private individual, you want to make sure that your financial paper work reflects exactly the same agreement you have with your partner. So if you are both taking out the loan, a pre-nup can help you make sure you both keep paying for it. If your partner is taking out the loan as an individual, a pre-nup will make sure that you never have to worry about paying for it later on.

Marriage is a partnership, much like a small business. And as any small business will tell you, keeping a clear record of finances and preferences is crucial to staying successful. So be prepared for anything that could happen and, if you haven’t already got one, talk to your partner about a prenuptial agreement before getting a home loan. It could potentially save you thousands.

But it can be difficult keeping track of the details of your loan amongst all the other payments in your life, that’s why we put together 10 short tips on repaying your home loan to keep you happy and debt-free.

1. Pay off your Mortgage quickly

If you stretch out your repayments, you are only generating more interest for your home loan provider – and spending more of your money. By paying it off quickly you can potentially save yourself thousands in the long term.

2. Get paid directly into your Home loan

By managing your income on a interest-free period credit card and having your wages paid directly against your home loan. As long as you can successfully keep track of your other finances, this generally means more money will be paid into your home loan; which means you pay less interest and are making payments for a smaller amount of time.

3. Pay your first instalment right after settlement

If you pay your first homeloan instalment asap, you’ll reduce the principal – reducing all future interest repayments as well. This can give you a jump-start on your repayments. Since the first repayment isn’t due until a month after your settlement, you can get ahead of the payment cycle and even save yourself some money as well.

4. Match your repayments with your income cycle

By setting up your repayment periods as the same intervals between your pay cheques, you are maximising the amount of money you keep on your loan. So if you get paid monthly, do monthly repayments (or weekly or fortnightly as needed). This way you are never running low on funds when your repayment comes around, and you are paying off as much as possible at a time.

5. Find a home loan that is right for you

The best tip anyone can keep in mind when thinking about a home loan, is to find a loan which matches your income and your lifestyle. By rushing into a large loan, you could potentially create problems that last for decades. But by playing it safe, you could save thousands over the life of your home loan. So find out as much as possible about any loan before you decide on it, and get constantly updated on the status of your home loan after settlement.

Sometimes finding the perfect home loan can be the key to buying your perfect home.

But is Sydney the most expensive city in the world?

Well in general terms Sydney has moved up from 37th to 7th most expensive city in the world over the last three years. This is due in part to the collapse of the American economy and the growing strength in the Australian dollar. But in terms of real estate, Sydney has moved up even more.

If not the most expensive city, with countries like Japan beating us out due to population size and demand, for a small population city (4 million compared to 20 million in New York) Sydney has become seemingly very expensive if you are looking to rent or purchase a home.

However, if you consider the state of unemployment (below 5%) and the average wages things start looking more affordable – especially with an appropriate home loan. That’s why finding a home loan and suitable repayment plan has never been more crucial if you are looking for a new home.

So don’t get bogged down by comparing prices from around the globe, unless you are seriously considering taking up residence in a neighbouring city or country, and instead take a firm look at your current finances and your home loan options.

It’s easy to say “Homes are expensive in Sydney”, but the more appropriate course of action is to find out exactly how these prices impact you.

Typically, mortgage brokers start with your income. This is the biggest and most obvious indicator of your financial reliability. From here they look at monthly expenses, starting with rent and any other form of expense being paid on a regular basis. Keeping track of commitments, general living expenses and any bills or debts is crucial for this to be an accurate representation of your finances.

Then they look at dependants. This means if you are living with someone who you are responsible for, whether it’s an elderly relative, a child or a partner – they need to keep track of that and any potential costs or problems this might raise. Generally this isn’t an issue, unless you are living with someone who is proven to be financially undependable in the past and wish to continue living with them in the future.

Finally, they consider all and any credit cards you own in order to judge exactly what your borrowing potential is. While usually borrowing against your credit card isn’t optimal, during a period of constant repayments like a home loan it can become a necessity. Your ability and aptitude at juggling these repayments is a big factor in keeping up with your home loan and this can be indicated by your current credit card situation.

Based on all these factors they judge what amount of money is realistically controllable by you in your current lifestyle. This could be higher or lower depending on any of the above factors, and can be hard to judge without talking to a financial consultant or mortgage broker in person.

While there are calculators for this kind of thing, you will find they aren’t as accurate as a trained professional can be and if it all possible that is who you should consult before making any kind of large financial decision. As always, finding the right people and the right loan is crucial to your own success.

However, this is not to say that they are completely extinct. While the no deposit home loans of the past were a little simpler, the current form of the no deposit home loan can still successfully ensure you are borrowing 95-100% of your loan without costing you anything up front.

How? Well there are three main ways to qualify for a no deposit home loan in Australia.

The first option requires input from your parents. If your parents own a property then they can “guarantee” your home loan, allowing you to borrow 100% of your loan without any savings required. The guarantee is secured behind your parents existing on mortgage on their property. This is the simplest and most common way to get a no deposit home loan in Australia at the moment.

The second option is to borrow 95% of the loan and a credit card with up to $20,000 in addition to your loan. This often offered by some banks and lenders, with the credit card sharing the same repayment rate as your home loan. This is a more complicated option, due to the additional paperwork and management of the credit card (not to mention the approval process). Additionally, this requires you to prove you have saved at least 5% of the purchase price over a 3 month period. You can get around this through being gifted (by your parents or a friend) the required money, but you would have to wait for 3 months after the gift before applying.

Lastly, if you already own property you can use that as your guarantee in order to obtain a no deposit home loan. While different banks and lenders arrange it differently, adding a second home loan to your existing mortgage is easily organised in most cases.

But whether you are looking at a holiday house for your family or just an additional property to rent out – there are certain pitfalls that you need to avoid in order to keep your head above water. Managing two mortgages can be as easy or as difficult as managing a single mortgage, it all depends on what kind of property you are purchasing, how you intend to make it profitable (if that’s your aim) and finding the right mortgage to support your choice.

There are a few things you will want to know right off the bat. Firstly, has the property gained value over the last few years (not including renovations)? If it was being rented out previously, has there been trouble finding tenants? And, most importantly, is the mortgage deal financing your investment flexible enough for your needs?

Much like buying a first home, a great investment property is one that is sound and reliable without costing you too much input – whether that’s time or money. But most important is arranging a mortgage offer which works for you, which is flexible enough to suit your needs and your capabilities.

So remember, don’t just find a great deal or a great property. Find a logical investment which is easily supported by your bank – and start benefiting from it.

First of all, and the obvious point that almost doesn’t need to be said; your interest repayment will be quite great, as you don’t have any equity on the house, so the interest is on the whole price of the house. So borrowers need to make sure their debt doesn’t become impossible.

Secondly, you have to be wary of the large fees associated with a large mortgage, such as mortgage insurance premiums. These charges, when racking up, can often eat into your First Home Owner Grant or other initial financial advantage, making it not worth it at the end of the day.

The last factor to be wary of is that a no deposit mortgage, especially in a property market liable to depreciate, is one of the few situations which can lead to the rare and unenviable situation of your liability exceeding your assets. Saying you take out a $250,000 mortgage with no deposit, several years of paying mostly interest, and $20,000 principal later, you see your house only to find the price is at $230,000, in which case you’ve just been paying a lot of interest for essentially no gain what-so-ever in equity. Or heaven forbid if the price drops even further, because then not only have you paid a lot of interest, you’ve also lost in equity – you couldn’t have been worse off paying rent.

In fact, that is one of the comparisons people should make before they take out a no deposit home loan – is it cheaper just to rent whilst you save a deposit?

Outside of these potential dangers, one must consider that it’s also quite hard to get a no deposit home loan these days. Most large banks will not offer them, and on the occasions where they are offered, the credit history check is very stringent – a single blemish and you’ll most likely to rejected.

No deposit home loans are not inherently bad or unsafe, but they must be taken with care and understanding for the nuances of the property market and one’s personal finances.

First of all let’s look at why you should pay off your home loan quickly. Assume you are taking a $300,000 mortgage (modest price for Sydney, Melbourne and Perth) at a 6% compound interest rate over 20 years. Your weekly repayment comes in at about $540, at this rate you’ll finish your repayment in 20 years, having paid a total of $215,830 of interest on a $300,000 mortgage.

If you add an extra $300 per week to your repayment, you’ll finish your repayments in a little under 16 years, having paid a total of $165,466 of interest. That’s over $50,000 of interest saved. And the quicker you pay down your mortgage, the more you’ll save on eventual interest.

There’s also the added security and ease of mind that comes from completely owning your property and knowing no banks can take it away.

So then, what are the (completely legitimate) reasons one may have for not wanting to pay down their mortgage payments as soon as possible?

For one thing, that horrifyingly looking $215,000 interest on the 20 year payment may be a little overstated. Due to the effects of inflation, that figure is bound to be a lot lower, some projections go as far as showing that a dollar in 20 years is about 50 cents now.

Secondly, if it’s an investment property, then interest repayments on a mortgage in Australia are tax deductible. An extra four years in repaying your interest could very well mean an extra four years of keeping you in a lower tax bracket, which may end up saying more money.

Lastly, it’s all about the relative return of other investments your money could be going to– all money works on opportunity cost. If your interest is fixed at 6%, and you have another investment opportunity at more than that, or if the economy changes to a degree that say, banks and treasury bonds offer more than 6%, then you should put your money in the higher yield investments rather than paying off debt.

So although there is a psychological and common-sense urge to pay off your mortgage as soon as possible, and often it is the wisest decision, the smart money manager will also look at the economy and his or her personal situation and make a more holistic decision.

This is a highly contentious question which has been at the centre of a global political and ideological debate since 2008. The Right wing of politics will blame poor people who make poor spending decisions and take mortgages they cannot afford; they also blame the US Government under President Carter (conveniently from the Democratic party) who passed acts making it easier for poor people to be approved for loans. This is a valid view, certainly there are many people in the US who, due to their infatuation with the middle class dream of a two storey house with two cars, take out mortgages that they can’t afford. And whilst Carter’s plan was originally well intentioned; to allow poor people the chance to own a house, it may have ended up doing more harm than good.

Meanwhile, the Left wing of politics tends to pin the blame for investment banks which adopt predatory lending practices to get as many people as possible to apply for mortgages, and the rampant deregulation of the banking sector by successive Republican Governments, for allowing the banking sector to run so wild that it caused its own demise. This is also a legitimate view: from the 80’s, banks began driving the bottom line of making deals, and executives and managers had to get as many people to apply for mortgages to their banks as it tied in with their bonuses and profits. As a result many people who should not be financially capable of buying a home were given loans. Furthermore Republican governments in the name of driving commerce and investment heavily deregulated the financial sector, which allowed investment banks to structure deals and financial products that were quite toxic due to how they were exposed to mortgages without any public oversight or transparency.

Depending on your political and worldview, there are many contributing factors. But the truth is that the seeds of the mortgage crisis had been growing for thirty years, and neither society, the government nor private sector took notice, or were willing to act, until it was too late.

Firstly, it’s about your past credit history. Your credit history is a combination of how well you’ve been able make past repayments, how close you are to your credit limit and the length of your credit history. The last factor obviously just takes time, but the first two is based on best credit practices – don’t spend beyond your means, and keep your balance down as humanly possible (paying off the full balance is always preferable to paying just the minimum monthly repayment). If you have a good credit history you have a better chance of getting approved.

Secondly it’s your household income. This seems like a pretty obvious point – if you earn more you’re more likely to get approved. But it comes up when say, for example, one of your household is in between jobs, in which case don’t apply for a loan until AFTER he or she has gotten her next job. As too many denied applications can also weigh against you. Likewise, if a pay rise is imminent, then wait until after the pay rise.

Lastly there are different lenders with different conditions for loan. To this end you should always use an online site to compare a vast range of mortgage lenders, it may seem like a small thing but it helps.

As you can see, there’s no real way to game the system to make yourself more attractive, it’s about best practices which, coincidentally, helps you with repaying your liabilities.