Work out what’s important to you about a home loan?
- Line of Credit
- Monthly Fees
- Split Loan
Choose the right loan for you!
Making a mistake could cost you thousands of dollars. Unfortunately, choosing the right loan by yourself is near impossible. With so many different loans and lenders available today it is vital that you get help from a specialist. AAA Mortgage Solutions and our fully trained Lending Managers are here to help you choose the right loan tailored to suit your needs. We will guide and assist you every step of the way.
If you want the flexibility to pay extra into your home loan, while having the 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:
- Standard Variable Loan with a free redraw
- Standard Variable Loan with 100% Offset
- A True Line of Credit or an Equity Loan
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.
Pay Your Loan off Quickly
There is no magic or any great secret to this, the simple methods of paying your loan off sooner are:
- Increasing your regular monthly repayment
- Paying fortnightly (half the monthly payment)
- Extra lump sum repayments
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 a 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. If you don’t know how, one of our lending managers can help you. Usually, the formula is quite simple, ad all of your income together, then subtract all of your expenses. What you have left over is commonly called “disposable income”, and this 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 you have the knowledge of 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 to always ensure that you put the offer in subject to finance. This means that in case of any issues getting the loan approved, you are not locked in to 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 unforseen 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 frequently. 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 payments during a month 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 the level they were 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, giving you the ease of accessing 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 doing paying off your mortgage, it really gives you motivation to keep it up!