WA first home buyers' grant.
Buying property is an exciting yet challenging task. Whether you are buying your next property or purchasing your first home, researching the market and weighing up the different products available is a must to ensure you get the best loan for you and do not end up paying more than you need to.
Understanding the new products on the Perth home loan market, and seeing how they may benefit you will enable you to make an informed decision, and the right choice.
Buying property is an exciting yet challenging task. Whether you are buying your next property or purchasing your first home, researching the market and weighing up the different products available is a must to ensure you get the best loan for you and do not end up paying more than you need to.
Understanding the new products on the Perth home loan market, and seeing how they may benefit you will enable you to make an informed decision, and the right choice.
Transition between properties
Trying to sell your current home while purchasing a new property can be very tricky indeed. Coordinating the timing of the sale so you can purchase the next property sends many home owners into despair, but it doesn’t need to be that way, and there are ways to help make this process easier.
The last thing you want is to feel pressured into selling your home for a low price because you need the sale to finance your new property. Even if you do sell first, timing both settlements can be a challenge to say the least. Bridging finance is available as a safety net, for this purpose and refers to a Bridging Home Loan that is a temporary form of financial cover. This loan allows you to buy or build your new home before you sell your current home.
Typically, your lender will loan you the money to cover the gap between settlement and purchase, so ultimately the lender agrees to take on both mortgages. The loan is usually offered for a period between a few days and a few months. Once the sale of your existing home is secured, the money can go towards paying off the loan.
You will need to show that you can repay the existing mortgage as well as the new costs and there may be some establishment charges also.
Benefits
- You can buy or build your new home before you sell your existing home
- You do not need to sell at a lower price just to be able to purchase your new home
Points to consider
- Interest is charged on the full amount of the original mortgage and the bridging loan
- This interest bill can quickly add up if you do not sell your existing home quickly.
- You will need sufficient equity in your current home to support the new loan
- If the bridging loan continues for some time, you may feel pressured to sell your current home at a lower price.
Standard variable rate home loans are a good option if you want greater flexibility with your mortgage. These home loans offer you the flexibility to make extra repayments and withdraw at a later stage, as well as other features such as splitting your loan. You will be required to make the minimum repayments set each month, for an agreed term which is usually 30 years.
Basic Variable Rate Home Loans
These home loans are considered the ‘no frills’ loan as they usually do not come with added facilities, such as extra repayments or redraw, but the interest rate is lower than with a Standard Variable loan. Therefore, if you are wanting more flexibility with your home loan, you may have to pay a slightly higher interest rate to have these benefits.
Fixed Rate Home Loans
This loan enables you to fix the interest rate for a set period of time – usually 1 - 5 years. Paying a fixed interest rate and the principal means you can keep your repayments the same each month. Minimum repayments need to be met each month and extra repayments are not available with this type of loan. At the end of the agreed term, the rate reverts to a variable rate loan unless you decide to renegotiate anther fixed term rate..
Introductory Rate Home Loans
Many home loans come with low introductory rates and ‘honeymoon’ periods. The low rate may seem very tempting and these can save you money in the beginning. But be careful of the short-loved savings and make sure you weigh up the benefits versus the interest rate you will be charged once the loan reverts to its usual rate. During the introductory period you would not be able to make additional payments so think carefully before taking out one of these loans.
As with all financial decisions, good advice can prove invaluable. Contact Your Local Finance Broker today on  to discuss your home loan options.
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