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Cut your home loan costs

Tuesday, 16 September 2014

Posted by Mozo

Feeling out of your depth with your home loan? It’s true this is possibly the biggest financial commitment you’ll ever make, but with the right tools and some know-how, you can save yourself thousands of dollars.

As soon as you decide to start saving for a home deposit, know what you’re up against. You may have an idea on how much you’d like to spend on a home, but a home loan borrowing calculator will help you see outright if you have the capacity to pay a mortgage for this amount. Keep in mind that your repayments shouldn’t exceed 30% of your net income.

Close down any credit card and store card accounts that aren’t absolutely essential – a home loan lender will factor in these card limits as part of your outgoings.

To avoid the additional costs of mortgage insurance, aim for a deposit of 20%. To help focus your goal, use a savings calculator to see how long it will take you get that deposit.

Once you’ve gotten an idea of what your weekly repayments on a mortgage would be, start setting aside that money now to experience what life with a mortgage will be like. (This is also a handy way for first-home buyers to put together that deposit.)

When it comes to finding a loan, it’s easy to be distracted by flashy interest rates that expire a year or two into your mortgage. To see if an introductory rate is going to cost more in the long term than a normal fixed or variable loan, compare the total cost with a home loan comparison calculator.

If you’re a tad bamboozled by all the terms and conditions, it always helps to have an expert on your side. There are mortgage brokers and home loan negotiators who can help you choose the right deal and even score a lower-than-advertised interest rate – all at no cost to you.

And if you already have a loan but think you could do better, compare home loans now. Don’t be complacent or think it’s too complicated to make a switch – the average mortgagee finds a saving of $35,000 over the life of their loan!

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