Save by planning ahead

NowOrLater

It’s never too early to plan for your home loan. In fact the earlier you get in, the more money you are likely to save on Application fee, Interest rate, Annual package fee and Lender Mortgage Insurance, particularly if you’re purchasing property during the peak season. By keeping it to last minute you are also running the risk of paying a penalty interest rate to seller if settlement gets delayed due to unavailability of finances. We started planning home loan application in March for a June settlement for our residential property. We’ve literally saved thousands by planning, exploring and applying ahead.

These examples are based on planning home loan to purchase Residential property. However, you can explore these strategies to home loan planning anywhere in the world.

Application Fee: An application fee is a once-off fee paid to the lender for setting up a home loan. The application fee can also be called an establishment fee, up-front fees, start-up fees, or set-up fees. An establishment fee is meant to cover the costs of creating your file and producing the necessary documents to set up your home loan. The amount you pay to establish a mortgage differs between lenders. Some may charge hundreds of dollars or more, others will bear the fee on your behalf and not charge you an application fees at all.

If you are planning ahead of time it helps to shop around, comparing and negotiate application fee to bring it down. Do not forget to ask if lender would wave off this establishment fee.

Interest Rate negotiation: The idea of negotiating can be intimidating. As consumers, we have been trained to pay price advertised on lenders website without question. If we feel the interest rate is too high, we abandon the purchase and look for other lenders. It’s an option that seems to work for us. But it could work better. We don’t always realize that mortgage brokers we have the knowledge and experience to negotiate a lower interest rate for you. The more you are borrowing, the more desperately lenders will fight for your business, and your mortgage broker can use this competition to your advantage to drive down your interest rate. He would play lenders off against each other to secure discount on the rate for the amount you want to borrow.

Annual package fee: When you bundle your home loan and bank account, you could enjoy the benefits of Package deal, which may including special discounts on loans, credit cards, everyday banking and home insurance. Different lenders have different benefits covered under home loan package. Annual package fee varies from bank to bank. Starting from $120 per year to as high as $395 per year. Few lenders offer to waive first years Annual package fee where as other could offer Annual package fee waiver for life. Saving of $395 annual package fee for 30 years of loan term equates to a massive saving of amount $11850.

Lender Mortgage Insurance: Everyone knows that a lower interest rate is better than a higher rate. However, few people realise that different lenders have different lenders mortgage insurance premiums. What most people also don’t know, is that savings on LMI premium is often far more significant than any difference in interest rate.

Lenders Cash Back offers: Few lenders have been offering home loan cash back to borrowers should they undertake finance with that institution. The amount that lenders offer as a cash back varies from lender to lender depending on market conditions. This can also depend on how hungry they are for new business. Lenders could be offering cash backs to the tune of $1500 throughout the year, and it is best to speak to a Mortgage broker (Call 0402410396) to get an idea of which lenders have that special on offer.

Disclaimer: The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

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What is family guarantee home loan?

Your family members can use their own home’s equity to provide additional security for your home loan under a family guarantee. The guarantee is for a portion of your loan amount, not the whole amount of the loan.

(Family members who can give a family guarantee are parents (including step and in-law), spouse, de-facto, grandparents, siblings, children, brother in law or sister in law, legally appointed guardian.)

This solution reduces your loan to value ratio which can in turn reduce or avoid the need for you to pay Lender’s Mortgage Insurance. (Your loan amount divided by the appraised value of the property.) This can save you a significant amount of money as well as getting you into your new home faster.

What are the advantages of a family guarantee?

Family guarantee helps you get into your new house sooner by reducing or avoiding LMI without having to have a big deposit. Other benefits include:

  • Being able to maximise the borrowing amount so you can get into your home faster
  • Getting a family guarantee doesn’t cost any extra fee.
  • Releasing the guarantee when the guarantor requests this once you’ve reduced the loan amount secured by the guarantee— your family member won’t be liable forever!

If you are interested to know about family guarantee, speak to your Mortgage Broker. They will help to guide you and the family members who may become your guarantor about this option.

What are the disadvantages/pitfalls?

If you have a family guarantee and you end up being unable to make your home loan repayments when they are due, then the bank may look to your guarantor (your family member) to pay the guaranteed portion of your loan. It will be really important for your guarantor to get independent financial and legal advice before they enter into their guarantee so that they understand all their obligations and the pitfalls.

Also, the guarantee can’t be released until the guaranteed amount is paid off and the loan is reduced.

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First Home Buyer Promotion !

Current Promotion:

Save $100 on Conveyancing fee for Home Loans over 300k, Choice of Big 4 Banks

Whatever your needs, LOANPAPA has the home loan experience and the trusted reputation to give you financial confidence.


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Discover ways to Pay off your Home Loan quickly

  1. Negotiate Lower Interest Rate with your Existing Home Loan provide.
  2. Change Repayments from Interest Only to Principal and Interest.
  3. Reducing Loan term
  4. Increasing Repayment frequency from Monthly repayments to Weekly repayments.
  5. Pay more than your repayments
  6. Lower your Expenditure and Increase your savings.

 

Disclaimer: The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

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