What the ‘best / most suitable home loan’ means for you
The “best” home loan is a very individual proposition. To decide what the best home loan for you might be, you need to consider your individual circumstances now and proposed in the future. BY LAW also EVERY lender must look at your living costs – ie food, telephone including the internet etc, council rates/water fees, holidays, life/car and house insurance, school fees (if applicable), recreation and entertainment, dining out & coffees, medical (doctor & dentist), and health costs (incl Health Insurance), maintenance , HECS fees (if applicable)
Some things to take into account might be:
Your “current” financial needs
What sort of repayment options are best suited to your current situation? Your interest rate and your loan term will impact your monthly repayments. Making “Interest Only” repayments is also an option, usually popular with investors, because the “interest repayments” (not principle) are tax deductible and over the course of the year and investors can claim this as a tax deduction and recently the government has forced most lenders to increase “Interest Only” & “Investment” rates. You may also be paying only “interest” repayments during a construction loan if you are building a new house, as these repayments are lower than regular “principal and interest” repayments. This allows you to make smaller monthly repayments because you are probably still paying rent until your new house is built.
Your “future” financial needs
A home loan is a long term, financial tool that will help you buy one of the biggest assets you will ever own. To find a home loan that grows with you, you’ll need to think about your needs and wants for now and the future. For young professionals for example, a no-frills home loan with a fixed interest rate could help you get used to repayments. When the fixed rate period ends, it automaticallt reverst to a more flexible (variable) rate as you become a parent or have bigger, financial goals or go for another fixed term…or a mix of both.
The purpose of the home loan
Whether you are buying a property as an investment or as your own home can affect potential grants you are eligible for, stamp duty costs and interest rates etc, and how you manage your repayments and interest at tax time. There can also be some BIG rate differences between “home” loans and “investment” loans, but a few have the same rates as long as both loans are with them so make sure you are comparing the right type of loan where your needs are being met.
Difference between “Offset” & “Redraw”
Offset On offset is a loan attached to your home or investment loan (everyday bank account). You can deposit wages or savings into the account and the balance/interest is offset against
the balance owing. Say you have a loan of $500,000 and put $20,000 into your offset account. Then you will only be charged interest on the loan balance $480,000. The more you are
able to put in the better. And the amount you put in is always available/accessable when ever you need it in part or full.
Redraw A redraw allows you to “redraw” any amount EXTRA you may have “paid off” ie reduced your home loan balance. And while the balance has been reduced you only get charged interest
on the balance.
What the ‘best / most suitable home loan’ means for you
The “best” home loan is a very individual proposition. To decide what the best home loan for you might be, you need to consider your individual circumstances now and proposed in the future. Some things to take into account might be:
Your “current” financial needs
What sort of repayment options are best suited to your current situation? Your interest rate and your loan term will impact your monthly repayments. Making “Interest Only” repayments is also an option usually popular with investors, because interest repayments are tax deductible and over the course of the year investors can claim this and recently the government has forced most lenders to increase “Interest Only” & “Investment” rates. You may also be paying only “interest” repayments during a construction loan if you are building a new house, as these repayments are lower than regular “principal and interest” repayments. This allows you to make smaller monthly repayments because you are probably still paying rent until your new house is built.
Your “future” financial needs
A home loan is a long term, financial tool that will help you buy one of the biggest assets you will own. To find a home loan that grows with you, you’ll need to think about your needs and wants for now and the future. For young professionals for example, a no-frills home loan with a fixed interest rate could help you get used to repayments. When the fixed rate period ends, you have the ability to refinance to a more flexible (variable) home loan as you become a parent or have bigger, financial goals or go for another fixed term…or a mix of both.
The purpose of the home loan
Whether you are buying a property as an investment or as your own home can affect grants you are eligible for, stamp duty costs and interest rates etc, and how you manage your repayments and interest at tax time. There can also be some BIG rate differences between “home loans” and “investment loans” so make sure you are comparing the right type of loan where your needs are being met.
Difference between “Offset” & “Redraw”
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