First home buyers guide to choosing a home loan.
We help you navigate your way through the home loan maze.
If you’ve made the hard decisions – where you want to live, what kind of place you’d like to buy, and how much you are able to spend, as well as whether you’re eligible for a First Home Owners Grant – you’re probably ready to choose a home loan.
However, with all the home loan choices that are available, this may not seem like such a straightforward task.
First things first: take a moment to familiarise yourself with what’s on offer. Then, sit down with a lending expert to get the wheels in motion.
With the help of one of our mobile lenders, Dixie Tang, we’ve put together this snapshot of home loan information to help you on your way to choosing a home loan:
Fixed versus variable rate loans
“A big consideration is whether you want a fixed or a variable rate loan,” Tang says. “It’s really important to think about how you want to use the account.”
With a fixed rate loan, you can lock in repayments at a set rate for anywhere from one to as many as 15 years. This gives you certainty of what your repayments will be for that period of time.
If you opt for a variable rate loan, you’ll be able to make unlimited additional repayments, redraw on your loan when you need to and may be able to take a holiday from making repayments.
“How much flexibility you need really comes down to your individual circumstances,” Tang says.
For example, if you know there is the potential for you to pay off larger amounts of your loan from time to time, then a home loan with a variable rate will mean you can have the flexibility to do this.
On the other hand, if you have a clear budget and would benefit from knowing exactly how much you need to put aside to pay the mortgage each week, a fixed rate loan could work better for you.
Fee and interest-savers
Some variable rate loans come with no fees, for the life of the loan, while others offer a low introductory rate of interest and no monthly fees.
A split loan enables you to fix part of your loan and leave the other part flexible, on a variable rate. Splitting your loan can give you the certainty of a fixed rate loan and the flexibility of a variable loan.
Interest offset account
If you set up an offset account, the amount of money in your offset account will be deducted from your home loan balance before interest is calculated. This could save you money and help you to pay your mortgage off in less time.
Home Loan Packages
A home loan package lets you enjoy special discounts across a range of banking products such as loans, credit cards, banking and insurance. Depending on your circumstances, this could provide good value on a long-term basis.
Buying your first home? Make an appointment today with one of our lending experts.
This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Commonwealth Bank of Australia ABN 48 123 123 124.