You have made the call, you’re going to start looking for a house. Now comes the dreaded procedure of getting a mortgage. So what are the best questions to ask and some tips and tricks from experts for getting yourself a mortgage you can live with, for the house that you live in.
Know What You have Got, Save The Difference
This seems obvious. So obvious, I suspect it would be the step that I would miss. Knowing how much money you have is pretty crucial when it comes to looking for a home loan. It’s not about what you hope to have, or might have if a couple of things fall your way. The work out how much money you would need before you could sensibly look to buy a house and save the difference.
Move back in with your parents, and save the rest by paying no rent. Or agree to not buy any clothes or nice new homewares until you have saved the golden amount.
Save Enough
While you can get a loan with 5% deposit, you are unlikely to have as much bargaining power and might have a greater chance of getting a better mortgage rate if you manage to save some more. On top of that, if you can save 10- 15%, you will have less money for the interest to collect in, saving yourself money in the long run.
While it may seem like a lot of money, and it is, it’s worthwhile waiting a bit longer and having a bit more stashed away for when you get to the point of approaching mortgage brokers.
Watch Interest Rates
People are going to offer you a million deals that will without a doubt save you money, are a surefire thing, and the best deal in town. It’s the same with everything- there are fakes and genuine people everywhere you go. Some deals are too good to be true.
It’s completely up to you what decisions you make, but the more informed you are, the better are you able to discern what is real and what is just talk. For a start, keep an eye on interest rates and the projections. As shown by the GFC, these are inexact to say the least, but will give you a feel for the financial year ahead.
Don’t Borrow Beyond Your Means
You might qualify for a huge repayment weekly, but that does not necessarily mean you should go for it. Your mortgage repayments need to be large enough to pay back your mortgage steadily, without being so huge as to make life impossible.
As with savings, it’s important to set up your personal finances in a sustainable fashion. If anything goes wrong, you should have means to save yourself from defaulting on repayments. Your house is a home first, an asset second, and your financial set-up should reflect that.
Fix It
Your mortgage repayments can be structured over a certain amount of years, usually between 15- 30. There are upsides and downsides to both- the shorter your term, the higher your repayments will be but the less interest you pay, saving you significant money.
If you choose to settle for a longer time period, you will pay more in interest but could be able to bolster your savings at the same time as paying back your mortgage. While there’s huge variety in mortgages, fixing for set periods will make budgeting easier. Yes, interests might dip, but you’ll be protected should they go the other way.
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