What You Need To Know About Home Loans
Information is extremely critical when shopping around for a good home loan. It is also equally important to know exactly why you need the home loan; is it for the house you will be living in or is it for an investment property?
Whether you are purchasing an investment property, buying your first home or even refinancing your mortgage, understanding the vast amount of information on these loans can almost feel like deciphering the toughest programming code.
With this in mind, here are a few pointers you should understand before applying for the loan.
• Total loan amount
The only person who knows what’s best for you in terms of money is you. Deciding the loan amount you need is a very important step and so you should work out how much or how little you can comfortably afford.
Remember, the loan amount will determine the consequent repayments you are going to be making. The best place to start is I assessing your total income and all your expenses. As a rule of thumb, your total home loan repayments should not exceed 30% of your gross income. You should leave out 2% to protect you in case of an increase in interest rates.
• What is the purpose of the loan?
This might seem a bit obvious, but this will outline exactly why you are taking out the loan. The reason or this is that different loans have different features and certain lenders provide better services for certain loans.
Is your loan for:
1. Purchasing an investment property
If you want to buy property to renovate then sell or to rent out, the best loan to apply for is an investment loan.
2. Property to live in
This includes first time home buyers who plan on residing in the property they want to buy`.
3. A reverse mortgage
This is best suited for anyone who’s more than 60 years. If you already own a home, this home loan allows you to borrow money with your home serving as equity and use the money as you desire.
4. A line of credit
This loan allows you to use your home as equity and use the money relieved for anything you’d like such as for a cruise.
Once you have all these figured out, you can now enlist the help of a financial and loans advisor to guide you on the best course of action and to also determine the best lender for your home loan.