Use online mortgage calculators
There are mortgage calculators online that you can use for a variety of purposes in order to educate yourself about home loans. The Borrowing power and repayment calculator will help you figure out just how much you can afford to borrow. A savings calculator can help you establish a timeline for saving toward a deposit. The loan comparison calculator allows you to examine loans side by side to determine which one is best for you. Examining all the options by using mortgage calculators should be your first step when shopping for a home loan.

 

Shop lenders
Some home buyers just go to their local bank, apply for a loan, and take whatever they are given. This is a certain way to end up losing money and not get your best loan. Look into all the lending institutions available to you, including online banks, who may offer better terms than you’d find locally.

 

Do your research
Examine all the different loan types. Read up on their payment schedules, interest rates, features, benefits and disadvantages. This will help you get an idea of what type of home loan you’re interested in before you start shopping for a loan.

 

Save up for a down payment
While low- and no-down payment products are available, having the traditional 20% down payment puts you in the best position to dictate terms and get the loan you want. As a better-qualified borrower, you will take advantage of better features, lower interest rates, and less fees. Since this is the case, it may be a better idea to save toward that 20% down payment instead of getting into the market right away with less money to bring to the table. You can use a savings calculator to find out how long it will take to hit your target.

 

Don’t worry if you’re not a perfect loan candidate
Maybe you don’t have the traditional 20% down payment. Or you don’t possess enough documentation to meet banks’ strict paperwork guidelines. Or you might be self-employed or you recently moved to Australia. All these characteristics make you a “non-traditional” borrower. Lenders still have products for you, though. Low- or no-doc loans are available, as are mortgages that require a smaller down payment. There will likely be additional fees, more restrictions, and higher interest rates, but just because you’re not the most “ideal;’ borrower doesn’t mean you can’t get a loan.

 

Don’t just compare rates. Compare features.
Lenders like to advertise interest rates. A low number will certainly get you in the door, right? But you need to be a savvy borrower and understand that a loan’s features are just as important, if not more so, than rates. You may want to split the loan down the line, refinance, pay extra or even redraw additional payments in the event of financial difficulties. If these features aren’t built into a particular loan, you may have to pay a penalty for this. So be sure to examine the features of a loan, not just that flashy interest rate. You need flexibility, so pay attention to features instead of signing off on a bare bones loan.

 

Budget
There are online budget calculators available to help you look at your monthly income and expenditures to get an idea of your surplus. This is very important. It’s crucial to budget not just when planning for the loan, but after you’ve gotten the loan as well. Before applying for a loan, you need to use a budget calculator to figure out your monthly surplus and determine how much you can realistically pay toward a mortgage. After you’ve gotten the loan and moved in to your home, you need to run your budget numbers again, find out your new surplus, and consider extra repayments.

 

Make extra repayments
The principal on a home loan is huge. Now consider the interest. Every day that principal sits there, interest is accruing, costing you more money. Paying above the monthly mortgage, making extra repayments, paying more frequently and putting any lump sums you receive toward the mortgage helps cut down that principal base faster, lowering your financial hit in the long run.

 

Use windfalls to pay off your loan
Gifts, inheritances, tax refunds, lottery winnings and any other windfall are all sources of funds you did not budget for. It’s all extra money. Using these unexpected lump sums to pay off your home loan faster and decrease the principal is a great idea if you’re a disciplined borrower.

 

Do the math and then pay fortnightly
Try this: divide your monthly payment by two and then pay that amount every other week instead of waiting for the monthly bill. Since this means you are making 26 “half payments” per year instead of 12 full ones, you’re actually knocking a full one month’s extra payment off your mortgage every year. You won’t miss the money, so this is a painless way to bring down your interest-accruing principal.

 

Look for grants and other breaks
There are many government programs out there that serve as incentives for home buyers to get into the housing market in Australia. The First Home Owners Grant, for example, is available in all states and can go a long way to help first-timers in Australia get into home ownership. Other exemptions and concessions are available, including the possibility of decreasing or eliminating stamp duties. Check with the revenue office of your state or territory for information on home buyer breaks available in your area.

 

Prepare for the additional fees
With a home loan, you don’t just need money for mortgage payments. You need to prepare yourself for all the other fees associated with buying a home as well. These include stamp duty, mortgage insurance if required, home inspection fee, home owner’s insurance, other inspection reports (there could be many), loan application fees, title fees and more. Researching these fees and understanding your additional financial responsibilities will help avoid “sticker shock” at the settlement table and beyond.

 

Understand the market and the economy
If you’re searching for a home loan, it’s a good idea to stay informed about ongoing trends in the economy in general and, more specifically, in the housing market. If more people are selling than buying, then it’s a buyer’s market and you may be able to make more demands of the seller or negotiate a better price. The inverse is also true. As far as the economy goes, you need to try to figure out if things are getting better or worse, since this should determine whether you get a variable rate or a fixed rate. If you feel like rates my drop, it’s better to stick with a variable rate to take advantage of additional savings. If it looks like rates will go up, you can instead save money by locking in that fixed rate.

 

Honeymoons aren’t always great
Honeymoon loans, that is. These introductory rate loans offer a fixed period at the start of the loan, typically a year though it varies by lender and product, where the interest is lower. Later, this goes up. This may be an attractive option for home buyers still trying to establish themselves or borrowers who want to take advantage of the lower initial payments by paying extra, but there are pitfalls. Using a honeymoon loan rate calculator, you will see that these lower initial payments mean that, over the life of the loan, you end up spending more since you didn’t put as much toward principal in the loan’s first year. Borrowers looking to pay extra may find that many honeymoon loans don’t offer this feature, so additional fees may be associated with these early payments. Borrowers need to be very careful and do their homework when considering a honeymoon loan.

 

Don’t go DIY for conveyancing
You may be tempted to forgo the cost of a conveyancy lawyer or a conveyancing firm by purchasing a home conveyancing kit. Why the price point of these kits is attractive, they could cost you in the end. Conveyancing is not a one size fits all proposition. It is a complex process and any number of issues could come up that a home conveyancing kit can’t prepare you for. Faulty conveyancing could lead to additional fees, fines or, at the very least, going back and hiring a professional in the end anyway.

 

Decide who you want to work with
There are a variety of professionals involved in the home buying process. Real estate agents, conveyancy lawyers or agencies, title companies, loan officers and more. These professionals typically offer referrals and you may find your real estate agent making recommendations for a whole team to take care of all of this for you. It may be convenient, but it’s your right to choose who you work with through the entire process. If you’d rather research each of these yourself and pick and choose, go for it. You may have friends and family have recommendations based on people they’ve had a good experience with during their home purchase. Feel free to choose your own professionals every step of the way.

 

Get your documentation in order
You need to prepare yourself for the home loan application. First, use the home loan borrowing power calculator to get a good idea of what you can afford. How can you fill out an application for a loan without a specific number in mind? As far as documentation is concerned, you need to bring your identification, bank statements, copies of at least your previous two paychecks, your tax records, and any other pertinent documentation, including records of loans and investments. It’s also a great idea to run a credit report. This will give you an honest look at how well you qualify for a loan, and it will also allow you to clear up any problems, discrepancies, or outstanding debt that may be a problem.

 

Save money by refinancing
If you have paid off a good amount of principle and you want to get your loan paid off faster, or if interest rates, terms and features have gotten much better than those with your existing loan, you can save a lot by refinancing. If you can afford it, you could refinance to a new loan that has a shorter term. This will force you to pay off the loan much faster. Or maybe you weren’t so established and had to settle for a non-traditional loan at first, and now you’re a much-better qualified borrower in a position to get more preferential terms. You should refinance to get into a better loan right away, in this case.

 

Use that equity
Equity is how much of the home’s value you actually “own.” It is the value and power built by paying off your principal. You can use this home equity as collateral for borrowing, making it a very valuable asset. Since a home equity loan “secured” debt (meaning that it’s backed by collateral), you should receive a lower interest rate. You can even use home equity to build value into your home by using a home equity loan to renovate or upgrade the home. Home equity is a tremendous benefit that home owners need to take advantage of.

 

Get those pre-purchase property reports
There are two types of pre-purchase property reports: the home report and the price report. Both are very important to prospective home buyers. The home report outlines the physical specifications of the home, including building materials, type of home, location and neighborhood details, pest inspection and more. You need to know ahead of time what’s right about a house and what’s wrong. The price report details pricing data, including past selling prices and the selling prices of comparable homes in the area. Together, these reports give the buyer a complete view of the home and can only add to negotiating power.

 

Inspire yourself with the extra repayments calculator
If you’ve been putting off paying more toward your home loan – and we all do, because there’s always something else to spend money on – take a look at the extra repayments calculator for some incentive to start paying more today. You will get a look at the great benefit even paying a little more will do in the long run. Every dollar you take off your principal is a dollar that will not accrue interest, after all. The extra repayments calculator can show you just how much you’ll save with just some small changes, so check it out today.

 

Use variable rates but constant payment amounts
If you have a variable rate loan and interest rates drop, it’s a good idea to keep your payment the same. This way, you’ll painlessly pay off more of your principal and get your loan paid off a little faster. This takes almost no effort and it has a huge benefit. Just remember: this doesn’t apply the other way around! When rates go up, remember to pay more!