Finding the Right Home Loan

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Guide To Finding The Right

Home Loan For You

HomeLoanFinder.com.au

http://www.homeloanfinder.com.au/





Guide To Finding The Right Home Loan For You

©Copyright 2010 | HomeLoanFinder.com.au p a g e | 2

Legal DisclaimersAll contents copyright © 2010 by HomeLoanFinder.com.au. All rights reserved. No part of

this document or accompanying files may be reproduced or transmitted in any form,

electronic or otherwise, by any means without the prior written permission of the publisher.

This ebook is presented to you for informational purposes only and is not a substitution for

any professional advice. The contents herein are based on the views and opinions of the

author and all associated contributors.

While every effort has been made by the author and all associated contributors to present

accurate and up to date information within this document, it is apparent technologies rapidly

change. Therefore, the author and all associated contributors reserve the right to update the

contents and information provided herein as these changes progress. The author and/or all

associated contributors take no responsibility for any errors or omissions if such discrepancies

exist within this document.

The author and all other contributors accept no responsibility for any consequential actions

taken, whether monetary, legal, or otherwise, by any and all readers of the materials provided.

It is the readers sole responsibility to seek professional advice before taking any action on

their part.

Readers results will vary based on their skill level and individual perception of the contents

herein, and thus no guarantees, monetarily or otherwise, can be made accurately. Therefore,

no guarantees are made.













Table of Contents

Legal Disclaimers ................................................................................................. 2

Introduction to Home Loans ........................................................................... 5

Home Loan Types ................................................................................................ 7

Standard Variable Mortgage .............................................................................................8

Basic Variable Mortgage .....................................................................................................8

Honeymoon Introductory Rate Home Loan ...............................................................9

Fixed Rate Mortgage ............................................................................................................9

“Professional Package” Home Loan ............................................................................ 10

Low Doc Home Loans ....................................................................................................... 10

Offset Home Loan .............................................................................................................. 10

Construction Home Loan ................................................................................................ 11

Line of Credit Mortgage ................................................................................................... 12

Bridging Finance Home Loans ...................................................................................... 12

How to Choose the Right Home Loan ....................................................... 13

Features, Perks, Bells and Whistles .............................................................................. 15

Big Bank, Credit Union or Boutique Lender ............................................................. 15

Deposit Amount ................................................................................................................. 16

Ask Friends and Family .................................................................................................... 16

How to Compare Home Loans ..................................................................... 17

Comparison Websites ....................................................................................................... 17

Mortgage Brokers ............................................................................................................... 18

How to Repay Your Home Loan Quickly .................................................. 19

Pay More Than the Minimum Payment ..................................................................... 20

Direct Debit Payments ..................................................................................................... 20

Change Your Payment Frequency ............................................................................... 20

Lump Sum Payments ........................................................................................................ 21

Switch Loan Products ....................................................................................................... 21

Offset Account ..................................................................................................................... 21









Repay Other Debts First ................................................................................................... 22

Don’t Use Redraw ............................................................................................................... 22

To Refinance or Not To Refinance ................................................................................ 22Mix and Match ..................................................................................................................... 23

Final Conclusion ............................................................................................... 24









Introduction to Home Loans

Buying a home is a life changing decision. Most people spend a lot of time and energy

searching for the right house to call home. They decide on an area they want to live in and

they figure out what schools, facilities and transport systems are nearby.

Once you’ve found that ideal home to call your own, you’re likely to head into your nearest

branch of your own bank and ask them about applying for a mortgage.

Yet not nearly enough people spend the same kind of energy working out how to find the

right home loan to suit their needs. In order to buy a home in Australia, a mortgage is

necessary for the vast majority of people. Such a large loan can affect your life and your

income for 20 to 30 years, so it’s important you figure out which will be the right one for

your own personal financial situation before you go out house hunting.

Not all mortgages are the same. Some are cheaper than others. Some have extra banking

facilities attached to them. Some are calculated very differently to others.

How will you ever know which one to choose if you don’t understand the basic differences

between them? The wrong mortgage type for you could affect your ability to repay them as

quickly as you might like.









You might also find that different types of mortgages will require very different qualifying

criteria. Certain customers will fit in with these perfectly, while others will want to steer

completely clear of these if at all possible.

So before you simply go in and ask your own bank’s lending representative to sign you up

for a mortgage, spend a little time working out whether your bank will be offering you the

best possible type of loan to suit your goals, your finances and your needs.









Home Loan Types

Banks call their mortgages ‘products’. To a bank, these are financial products to sell to

customers just like you. This need to offer customers better product choices has led to them

releasing a wide range of different home loans to choose from that can potentially confuse

even the smartest customers.

In fact, did you know that many bank lending representatives have been trained to offer

‘standard variable’ loans or ‘fixed rate loans’ to customers unless they’re specifically asked

about alternative products? This could mean your own bank has even better home loans

available that they don’t always tell you about!

So rather than be caught in a mortgage that might not be the right one for you, take a few

moments to consider some of the options available.









Standard Variable MortgageThis is the normal type home loan most banks, credit unions and financial institutions offer.

The repayments you pay are amortised, which means your repayments contain both a

principal and an interest component. So every time you make a payment, a little goestowards paying down your balance and a lot goes towards repaying your interest charges.

A standard variable mortgage has an interest rate that can move up or down, depending on

the official cash rate. This could mean your minimum repayments will increase if your

interest rate rises, and your minimum repayments could be reduced if the interest rate falls.

These types of loans can extend up to 30 years, although there were some boutique lenders

offering loan terms of up to 40 years not so long ago.

The standard variable interest rate is usually the benchmark retail rate that customers arequoted when banks issue discounted rates or other loan amendments or modifications, so

it’s a good rate to watch for when you’re considering your options.

You may also find that most standard variable rate mortgages are eligible for various

discounts and other add-on financial products.

Basic Variable MortgageA basic variable rate mortgage is almost the same as a standard variable mortgage. You still

have a variable interest rate that can fluctuate with the market, but it’s often offered at a

discounted interest rate that remains discounted for the life of the loan.

These types of home loans are considered ‘no-frills’ mortgages. The customer can benefit

from a cheap interest rate, but won’t receive many of the additional features available on

other types of loans. There are some lenders that may offer a redraw facility with these

types of loans, but this can sometimes be limited in scope.

If your only concern is keeping your interest costs down and you feel that the official cash

rate could be falling, this could be a good option for many people. Most banks offer these

types of mortgages, but you’ll find that plenty of smaller lenders and mortgage originators

will offer these types of loans and advertise them as being “lower than the big banks”.









Honeymoon Introductory Rate Home LoanA honeymoon home loan offers customers a heavily discounted interest rate for a period of

time, usually around 12 months. When the honeymoon is over, your interest rate will return

to the usual standard variable rate.

Keep in mind that, although you might be saving money on interest costs in that first year of

your mortgage, the remaining 29 years of the loan term will be charged at a higher rate. If

you were receiving a discount on your interest rate before opting for this type of loan, or

perhaps hoping to switch to a lower fixed rate, you may lose your discounts.

Introductory home loans also often carry “deferred establishment fees”. These are fees

charged if you exit the loan earlier than 4 or 5 years. These fees can run into the thousands

if your lender charges a percentage of the remaining mortgage balance.

Fixed Rate MortgageA fixed rate mortgage allows you to lock in your interest rate for between 1 and 5 years,

although the Westpac do offer a 10 year fixed rate to some customers. Fixing your interest

rate can allow you to budget safely, as you know your repayments won’t change throughout

the duration of the fixed period.

When the fixed period ends, your loan will revert to your bank’s standard variable rate

automatically, unless you choose to lock it in again for another term.

If you know you’re fixing your home loan at the low end of the interest rate cycle, you could

get lucky and lock in your rate before the cash rate starts to climb again. However, if the

rates are already in a rising stage of the cycle, you may find that you end up fixing in at a

higher interest rate than you wanted once the rates start to turn down again.

If you try to refinance your mortgage or otherwise break out of a fixed term mortgage

before it’s ended, you could also face steep exit fees. Most banks calculate their exit fees

based on the amount of interest they’re likely to lose from you breaking that loan.

So if you’re paying a high fixed rate and the standard variable rate is much lower, your fees

could run into the thousands. However, if you’re fixed in at a really low rate and the

standard variable fee is much higher, you may get away with paying no exit fees at all.









“Professional Package” Home LoanMany banks and credit unions offer discounts on their standard variable rates to some

customers. These discounts can often be up to 0.7% off the standard variable rate. Once

upon a time, these were labelled ‘professional package’ discounts and often applied tothose customers with multiple mortgages, such as investors or high net wealth individuals.

These days, those same discounts often apply to customers borrowing more than $250,000.

Some banks may only offer a 0.4% discount at this amount of money, with the discount

rising to 0.7% for amounts over $500,000. Other banks may offer the full discount available

at the lower amount borrowed. The best way to know is to shop around.

You may find that if you qualify for a professional package discount, you could also be

entitled to bundle other banking products in with your mortgage. For example, you could

find that a customer with a professional package mortgage could qualify for a credit card

and a transaction account where the account fees have been waived. You may also qualify

for further discounts off the interest rates for other loan products, such as personal loans or

margin loans.

Low Doc Home LoansLow doc home loans are specific types of mortgages that allow the borrower to provide far

less documentation to the bank in order to qualify for the loan. For business owners who

are unable to provide full income verification in the form of two years of financial

statements and tax returns, banks may allow these customers to provide only Business

Activity Statements (BAS) as income verification.

Other lenders may also allow a “self-declaration of income” in place of any financial

documents at all. However, the maximum loan-to-value ratio (LVR) allowed on these types

of loans is often much lower than allowed on fully verified loans. In most cases, this is a 60%

LVR, with some banks opting to go as high as 80% LVR with mortgage insurance payable by

the customer.

Offset Home LoanAn interest Offset Mortgage is just the same as a regular standard variable mortgage, with

the addition of a linked transaction account that is designed to offset the cost of your

mortgage interest.









Rather than paying you interest on your savings, an offset account actually reduces the

amount of interest you pay on your mortgage.

For example: If you owe $100,000 on your mortgage and you have $10,000 in savings sitting

in your offset account, you will pay interest on $90,000 instead of on the whole portion.

When you have amortised repayments (payments that contain both a principal component

and an interest component), this effectively means you’re paying more off your mortgage

balance with each repayment and paying less on the interest portion of each payment. This

can seriously help to reduce a mortgage balance quickly when it’s used the right way.

Ideally, customers are encouraged to pay for their living expenses using a credit card

throughout each month and leave their entire salary or income sitting in the offset account.

This maximises the amount you can offset against your mortgage interest. During that

month, you can make use of your credit card’s interest free days. At the end of the month,you wipe your credit balance clear from the funds in your offset account. If you do this on

time, you shouldn’t incur any interest charges on your credit card statement at all, but you’ll

have reduced your mortgage interest bill in the interim.

Unfortunately, if you know you’re not the type of customer who is disciplined enough to

retain a large amount of savings in an offset account, this type of loan may not be

worthwhile for you. Likewise, if you have a tendency to spend more money on your credit

card than you can afford to repay each month, you might want to opt for a different kind of

mortgage.

Construction Home LoanConstruction loans are a little bit different to most other types of loans. In fact, there was a

time not so very long ago when not all banks offered home loans for construction purposes.

When a bank creates a construction loan, it’s created to include four or five progressive

draw down components. Each draw down is paid directly to your licensed builder in stages,

so your loan will grow progressively throughout the construction phase.

For example, when your foundations are poured, your bank will forward an amount of

usually 20% or 25% of the total loan amount to your builder and you will begin incurring

interest on that portion. When your first-fix framework is completed, another draw down

will be issued, raising your mortgage further. This continues until your loan is fully drawn

down and you owe the full amount you applied for. Your new home should be completed by

this stage.









During the progressive draw down period, you are liable to pay the interest charges every

month on the amount drawn down, but you won’t be making your full monthly mortgage

payment yet. Only when your loan has been completely drawn will your regular principal

and interest payments commence.

Some banks may allow you to make voluntary principal payments on your progress-drawn

loans during the construction period. This can help to reduce your overall mortgage balance

later if you begin to repay it while it’s still low. It pays to ask your bank before you attempt

this.

If you’re not using a licensed builder, but choosing to build your own home as an owner

builder, very different criteria will apply for your mortgage.

Line of Credit MortgageA line of credit is like a gigantic credit card. You have a credit limit that remains the same

regardless of how much you pay off your balance. Lines of credit are charged at Interest

Only payments.

This means every time you receive a statement and you see the minimum payment listed

there, it is just enough money to cover the interest costs only. In order to reduce your

balance, you need to make voluntary extra payments onto your home loan.

Lines of credit can be very dangerous financial tools for customers who don’t have the

discipline to run these properly. However, if you can manage to keep a large amount of your

income in your line of credit for as long as possible, you could find it’s a very effective way

to reduce debt and still have the flexibility to access to funds when you need them. These

types of mortgages can be ideal for some investors who may need the flexibility of

withdrawing large sums of cash to use as deposits for other investments.

Bridging Finance Home LoansBridging finance home loans are specific types of mortgages that allow a home owner to buy

a new home without first having to sell their old home. Banks who offer bridging finance

allow an overlap of the mortgages so that you effectively have one enormous mortgage

outstanding over both properties. This might sound scary, but most banks will allow you to

capitalise your interest payments into the loan to be paid off when your house sells

(assuming you have sufficient equity to cope with that amount of capitalisation, of course).

When you sell your first home, the amount is then paid down and you’re only left with theamount outstanding for the home you purchased.









How to Choose the Right Home Loan

Before you apply for a home loan, sit down and really think about what you want from a

home loan. For most people, their first answer will be “the lowest interest rate possible”.

However, there are times when a simple ‘no-frills’ basic variable home loan with a low

interest rate might not help you meet your goals and plans for the future. You might alsofind there are times when a fixed loan might be completely wrong for your goals too.

Here are some things to think about when choosing the right home loan to suit you and

your own personal financial situation:

Your Future Goals

This should be the first step for anyone considering applying any form of finance at all. If you’re applying for a mortgage to buy a home, think about what you intend to do in 2 years,

5 years or 10 years.

Are you buying that home as a stepping stone to build up some equity? This could mean you

plan to sell that home in the next few years, so always check what kind of early exit fees or

deferred establishment fees could be charged if you pay off that mortgage early.









Are you hoping to begin a family in the near future? If you know one of you will stop

working to begin a family, this will mean your income will be reduced. Don’t be tempted to

qualify for a mortgage using both of your current incomes if you know one of them will stop

in the near future. This is a recipe for disaster, as you’ll struggle to keep up with your

payments if you’ve borrowed more than you can afford on one income.

Will you turn this property into an investment property in the future? Changing your loan

structure in the future can get expensive if you make the wrong decision, so make sure you

work these things into your current strategy.

Interest Rate

Of course checking out the interest rate is a major part of finding the right home loan. You’llalso need to decide whether you want to go with a variable rate or a fixed rate. However,

think about your own goals and plans before you opt for a mortgage based purely on

interest rate.

Often the really low variable rates come with application fees, valuation fees, and legal fees

to set them up. They may also charge hefty discharge fees, exit fees, deferred establishment

fees and other penalty fees for breaking out of them early.

Fixed rate home loans also carry ‘break fees’ if you break out of your home loan before the

fixed term has expired. If you know you’re likely to sell your home or refinance it over to

another lender in the next couple of years, don’t choose a fixed rate loan. At best, try to

only fix in your rate for a shorter term instead.

Some customers may find that an offset account may carry a slightly higher interest rate

than a basic variable home loan. This can be enough to put some people off and get them

shopping around for the right basic variable loan instead.

However, if you know you’re disciplined enough to make one work in your favour, you’ll find

that you end up paying far less interest in the long run by choosing a loan based on itsfeatures rather than its rate. Besides, you can always ask the lender if they have a

professional package discount available on the amount you’re borrowing to help reduce the

interest rate further.









Features, Perks, Bells and WhistlesDo you really need a fully-featured home loan, with all the add-on products associated? An

offset account sounds great on paper, but it does require a considerable amount of financial

discipline to really benefit from it.

Likewise, do you really need a line of credit? Sure, these are often far more flexible than a

regular principal and interest loan, but they are also often charged at higher interest rates.

They can also be deceptively simple to the point that many customers find they can’t seem

to reduce the amount they owe, no matter what they try.

Many professional pack home loans come with extra features that sound ideal at first.

However, do you really need that more expensive credit card? Do you intend to use the

offset account that comes with your mortgage? Will you ever really use the discount offered

on a margin loan? Do you even know what a margin loan is?

Be realistic about your own spending patterns and habits and then choose a home loan

based on what you know will be right for you.

Big Bank, Credit Union or Boutique LenderSome people harbour strong aversions to Australia’s “Big Four” banks and want to steer

clear of them at all costs. Other customers may have a deep-seated mistrust of the smaller

boutique lenders and mortgage originators and prefer choosing a larger bank.

When it’s time to choose a home loan, you might find that the previous aversion you had to

a particular bank or branch comes into play. Yet what happens when that particular lender

has the best home loan to suit your needs.

Would you willingly pay more money to choose a more expensive home loan just because

you don’t like one particular bank? Or would you make a decision based purely on financial

needs and numbers and choose the one that’s right for you regardless?









Deposit AmountEven if you’ve done all your homework and found the ideal type of home loan to suit you,

this won’t do you the slightest bit of good if that lender requires a larger deposit or equity

amount than you have available.

A few years ago there were a number of lenders offering “no deposit” home loans. These

were abruptly withdrawn in late 2008, with most lenders dropping their loan-to-value ratio

(LVR) down to 90%. This meant customers would need a minimum of 10% of the purchase

price as a deposit, plus fees for stamp duty and other associated costs.

In recent times, the LVR has begun to creep up towards 95% once again with some banks for

customers purchasing established homes. However, if you’re thinking of refinancing your

existing mortgage to a different bank, you might find the LVR is still at a maximum of around

85%-90%

Of course, at an LVR anything over 80%, you will be expected to pay a mortgage insurance

premium, so be sure to factor this extra cost into your comparisons.

Ask Friends and FamilyWhen it’s time to think about home loans, most people will begin to ask friends and family

what works for them. Listen to what they have to say about their lender and about the

customer service they receive from their bank. This can help to eliminate some lenders that

might not be suitable for you.

But ignore their advice on a particular type of mortgage product.

You see, what might be working wonderfully for them may be disastrous for you. This is

because their financial situation is not the same as yours. Your income is different, your loan

amount is different and your expenses will be different. What makes you think their type of

home loan will work for you when you have completely different financial lives?

Always work on your own goals, plans, income levels, and spending patterns.









How to Compare Home LoansThere are plenty of ways to compare home loans to discover which will be the best for your

particular needs. When you’ve determined what type of home loan will be right for your

goals, take some time to compare the options available.

For example, if you’ve decided that a basic variable home loan is right for you, compare only

those banks and lenders offering a basic discounted variable loan. Check their entry and exit

fees. Ask if they charge any monthly account keeping fees. Be certain that the rate is a true

basic rate rather than a short-term honeymoon rate.

Then see if you can find a good mortgage comparison calculator. This isn’t the same thing as

a mortgage repayment calculator. It’s a specific bit of formula that shows you the total cost

of one mortgage as it compares to another.

In a good calculator, you should be able to enter your mortgage amount, any application

fees or set-up fees, any account keeping fees, the interest rate and the loan term. This will

give the formula enough information to determine your total cost of the loan over the

entire mortgage term.

Comparison WebsitesThere are plenty of mortgage comparison websites available on the Internet. Look for an

Australian-specific comparison site and see what you can find there. Many of these will be

impartial to which lenders they recommend, basing their comparison results on purely

numbers.

If you see a particular mortgage product you think will suit you, spend some time looking for

reviews on that home loan by other customers. Check out what others are saying. See if you

can find any details or fine print on the lender’s website about hidden fees, costs, charges or

associated extras you might not expect.









Mortgage BrokersMost mortgage brokers are able to run a home loan comparison very quickly and easily for

you. They should have the software available right there on their laptop computers for you

to see.

Unfortunately, not all banks advocate mortgage brokers, so you won’t be getting a true

comparison of all the mortgage products available.

Be sure to ask your broker which banks, credit unions, building societies and lenders they

are accredited and licensed to write mortgages for. You’ll find they will have a good 10 or 15

banks under their belts, but they may not be able to offer you the one you really wanted

with the bank you preferred.









How to Repay Your Home Loan Quickly

It sounds so easy: apply for a mortgage and then make the repayments every month until

it’s paid off. Right?

Unfortunately, if you pay only the bare minimum repayments shown on your mortgage

documents each month, it will take you 30 years to repay. By the end of those 30 years, you

will have paid almost as much in interest as the original amount you borrowed.

Yet there are plenty of ways to repay your mortgage far quicker than the 30 years you

signed up for on your documents. It’s just a matter of choosing any of a combination of

tactics that work for your own financial situation and sticking with it until your mortgage is

gone.

Here are some tips to help get you started:









Pay More Than the Minimum PaymentThis sounds logical, but it’s surprising how many people don’t do this. Arrange for a direct

debit from your regular transaction account for an amount slightly higher than the minimum

payment due. Work on rounding up your payment to a nice even number. This willautomate the payment and make it easier for you to remember how much your payment is

each month.

Direct Debit PaymentsDon’t rely on your memory to go into a branch and manually make your payments. You also

shouldn’t rely on your memory to electronically transfer your mortgage payments each

month. Instead, set up a direct debit repayment option that withdraws your payment from

your transaction account automatically, either weekly, fortnightly or monthly.

This will also stop you from being charged any overdue fees or penalty interest rates if you

happen to forget to transfer the money yourself by the due date.

Change Your Payment FrequencyPaying your mortgage monthly will mean you make 12 payments in a year. If you change

your payments over to fortnightly, you’ll be making the equivalent of 13 monthly payments

each year. This happens because there are 26 fortnights in each calendar year.

Just make absolutely sure the amount you make is calculated by dividing your regular

monthly payment by 2. Then pay this amount. Don’t fall for the bank’s calculation of

dividing your annual payment by 26. This won’t put you any further ahead.

Remember: Monthly payment divided by 2.

If you’re paid weekly, arrange to make your repayments weekly instead. You will still have

the same benefit as paying fortnightly, as you’ll still pay the equivalent of 13 monthly

payments each year, but it will make your budgeting easier to manage.

Remember: Monthly payment divided by 4.









Lump Sum PaymentsIf you receive a tax return or a bonus at work, pay a lump sum payment off your mortgage.

You’ll be reducing your balance and reducing the amount of interest the bank can charge on

your balance.

Switch Loan ProductsIf you’re not happy with your current mortgage, call your bank and ask about switching to

an alternative loan product. You might want to fix your interest rate or switch your loan

completely over to a basic variable home loan.

Your bank may charge you a small ‘switch fee’, but if it reduces your interest costs andmakes it easier for you to repay your loan, this could be worth the hassle.

Offset AccountAs mentioned earlier, an offset account can be a great way to reduce your mortgage

balance very quickly – but only if it’s used correctly.

The object is to try and leave as much of your income as possible in your offset account eachmonth for as long as you can. Your mortgage interest is calculated daily on the balance

outstanding, minus the amount you have in your offset account. The total interest charge is

then capitalised onto your mortgage balance at the end of the month, where you’ll make a

payment almost immediately to reduce it again, along with an extra portion that comes

directly off your principal.

During the month, the idea is to pay for your living expenses and other bills using your credit

card. Ideally, you should be spending far less than you earn. At the end of the month, you

use the income that was sitting in your offset account to pay off your credit card. You have

no interest charges on your credit card, thanks to the bank’s interest free days, and you

should still have savings left over sitting in your offset account that you didn’t spend. You

also paid less on your mortgage interest as a result.

Unfortunately, things don’t always run this smoothly. Many people spend far more than

they earn on their credit cards and find they’re unable to repay it in full. They also find that

they can’t keep savings in the offset account for very long. If this sounds like you, don’t try

this option!









Repay Other Debts FirstIf you think about any other debts you have, you might notice that the interest rate on

those is much higher than you’re paying on your mortgage. Your credit card or car loan will

have considerably higher interest rates.

In order to really pay off your mortgage quickly, you’ll need to find extra cash from your

current income. Unfortunately, most people end up putting their extra cash towards other

debts, which means they don’t have any left over to repay the mortgage.

However, if you focus hard on repaying your credit card debt, you won’t have those monthly

payments to think about any more. Put that same amount of money you were paying off

your credit card towards your car loan or personal loan and continue this until that loan is

paid off.

Then add that same amount of money onto your mortgage payment every month. By this

time, you should be paying an amount that is the same as your mortgage payment, your

personal loan repayment and your credit card payment. All this will be going directly off

your home loan, which can really speed up how quickly you pay it off.

Don’t Use RedrawIf you’re striving to repay your mortgage quickly, your redraw facility is NOT your friend. It

can be very tempting to see just how much money is available to redraw from your

mortgage. You could use it to pay off that credit card or to buy that new electrical item

you’re thinking about, or even withdraw it all and buy a new car.

Unfortunately, this will just raise your mortgage balance again and you’ll have to do all that

work of repaying it all over again. Avoid using your redraw facility wherever possible. The

object is to pay off your mortgage, not keep adding to it.

To Refinance or Not To RefinanceIf you’re shopping around for a better deal on your home loan, you could possibly save a lot

of money by refinancing to a different bank. You can take advantage of cheaper interest

rates, better loan terms or even better loan types.

However, refinancing can become expensive and will incur fees. If those fees won’t

outweigh the amount you’ll save, you’ll find it best to stay right where you are.









You might also find that refinancing your existing home loan could reset your mortgage

term all over again. For example, if you’ve already spent the last 6 years repaying your

mortgage and you refinance over to a new bank, your loan term will be set all the way back

to 30 years again.

Mix and MatchMix and match a few of the tips given here to help repay your mortgage more quickly. You

might decide to make your payments fortnightly and round up those fortnightly payments

to the nearest $10. This gives you the benefit of extra payments and more regular payments

at the same time.

If you can’t afford those extra payments right now, just work on changing your paymentfrequency and focus on repaying some of your smaller debts first to give you a little extra

cash to work with later.

Work with the options that suit your own budget and your own spending patterns. You

really don’t have to spend an entire 30 years paying off your mortgage.








Final Conclusion

A home loan doesn’t have to be a scary 30 year burden if you don’t want it to be. Spend the

time working out which will be the best mortgage for your needs and goals. Work out your

budget before you apply and make sure you have a plan in place to begin repaying your

home loan as quickly as possible.

Take the time to work out exactly how much you can afford. Be realistic about whether you

should borrow using one income or two, especially if you know one of those incomes might

just stop in the future.

Don’t be tempted to buy a more expensive house than you can realistically afford to repay.

Sure, having a nice house can be great, but what’s the point if you have to work overtimeevery day just to afford it? You’ll never be home to see it!

Your home loan is the key to buying your family home, so be sure you find the one that

works for your own financial situation wherever possible.

HomeLoanFinder.com.au





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Finding the Right Home Loan