Choosing the right home loan is a significant financial decision. With the multitude of loans and lenders available, it’s a daunting task to navigate alone. This is where AAA Mortgage Solutions and our expert Lending Managers step in. We’re here to guide you through the process, ensuring you choose a loan that’s tailored to your needs and financial situation.
If you want the flexibility to pay extra into your home loan while having access to your money in the future, you should choose a loan that offers that flexibility with no penalties. The good news is that most lenders provide this option. These days the banks have had to adapt to keep up with their competitors. The loan products that best provide this flexibility are:
Paying extra into your home loan will reduce the amount of interest paid and also the term of the loan. It is important to keep in mind that most lenders have restrictions on how much extra can be paid into a loan during a fixed term.
There is no magic or any great secret to this, the simple methods of paying your loan off sooner are:
We will work for you, our customer, to achieve the best financial results and save you money.
One of the most common mistakes people make when buying a home is not having a plan of attack. This can be as simple as not having a budget, not researching the market, or, in some cases, paying too much for the house and the finance.
There are lots of home loan tips that we can give you, but the most important one, above all, is that you must work out a budget. Suppose you don’t know how one of our lending managers can help you. Usually, the formula is quite simple: add all your income together, then subtract all your expenses. What you have left over is commonly called “disposable income”, which will give you an idea of what you can afford to pay on a mortgage. Once you have done this, our lending manager will be able to give you an idea of what price range you can look for a house in, and look at the product that suits your needs.
Now that you know what you can afford, it’s time to look for that dream home! When you find it, you put in your offer with the real estate agent. The second most crucial tip is always to ensure you put the offer subject to finance. This means that in case of any issues with getting the loan approved, you are not locked into the contract. You want to ensure there are no little surprises that are going to show up after settlement. Another important step is to make sure your sale contract is subject to whatever inspections you think are necessary. (Eg, Building inspection, termites, etc.) This prevents any unforeseen surprises after settlement.
So, let’s say, you buy the house, the settlement is done, and you are now the proud owner of your dream home. You want to start paying your mortgage and embark on your journey to pay it off as soon as possible. One of the best ways to reduce your interest charges and pay off your loan faster is to make your repayments more frequent. Instead of making monthly repayments, try to make them fortnightly. This helps in two ways. Firstly, because there are 26 fortnights in the year, you will actually end up making the equivalent of 13 monthly repayments. Secondly, as interest charges are generally calculated daily and accrued monthly, the more often you make monthly payments, the lower the accrued interest will be. On a 25-year loan for $300,000, making fortnightly repayments would reduce your loan term by 4 or more years.
While you are paying off your home, chances are that interest rates will change! A vital tip here is that if rates drop, try to maintain your repayments at their level before the rate drop. The extra repayments will come directly off the principal loan amount, helping you pay off your loan sooner and reducing your total interest charges. If rates go up, speak to your AAA Lending Manager and review your mortgage to ensure that the product is still the best for your situation; we may be able to refinance the loan at a better rate or give you some options to consider.
Most lenders have Internet banking facilities, allowing you to access your home loan details over the Internet. At the very least you should be able to check your home loan amount and view your transactions (payments and interest charges). Some lenders may have other Internet Banking features, such as allowing you to make lump sum repayments or set up periodic repayments and view how far your payments are in advance. This is a powerful tool because, let’s face it, if you can see how well you are paying off your mortgage, it really motivates you to keep it up!
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