Re: Home Loans

[Macca86]

Ok so myself and Mrs Macca are considering going for a home loan soon as there are a few places in town we are keen on at the moment. I am very clueless on this stuff and have only just recently been starting to try and do some research on the whole matter of buying houses. I already have enough for a deposit, and I havnt owned a house before so would get first home owners grant as well.
I know there are several people on here who are home owners/investment property owners so I was wondering if you had any basic advice or things to look for when going for a home loan? Anyone in particular good/bad to borrow from in your experiences etc? Any advice is appreciated

[minux]

All I can advise is look around. Go and talk to your bank manager, make notes, then go to a different bank and compare.

Much like buying a car, read the fine print etc.

[ClairBear]

Shop around to get a good deal and make sure you can still live comfortably once the mortgage payments are made. Buy something small and build up equity rather than end up struggling with a giant mortgage.

[CSP]

As a first step, go have a meeting with a Mortgage Broker. That'd be my best bit of advice. See how all the different options compare. Plus they won't sugar coat a bank's product like the bank trying to sell it to you will.

[minux]

Oh one more bit of advice I live by. If you cannot afford the mortgage repayments based on 13% rates. You cannot afford the mortgage.

[CSP]

Oh one more bit of advice I live by. If you cannot afford the mortgage repayments based on 13% rates. You cannot afford the mortgage.

I did my calculations based on 15% but yeah... Agree with that!

[ClairBear]

Back in the 80's the interest rate hit around 18%, people lost their homes left right and centre. Back then mine was capped at what was then considered low - 13.5% so I was on easy street.

The lesson in this is make sure you have a buffer with your mortgage payments so that if rates rise you are going to be ok.

[Jesterarts]

Me and my fiancee are just about to start building a place.

Most of our loan selection, etc was handled by a finance company for us primarily based on interest rates.

We've got the ANZ Simplicity PLUS, from what I understand it's a no thrills package that's relevately flexible and has a alright rate compared to the other big 4.

Most financial advisors will tell you to budget 4% more than what they are when you take the laon out to ensure you're pretty much safe with repayments.

Other tips, if you can afford to, make extra repayments. An extra hundred here and there makes a big difference long term. Plus in alot of cases what you pay extra now is a safety next for down the track if you're off work with an injury. In our case I know that what we pay extra we can withdraw and use to make repayments with.

Oh, and also get a loan with a "Interest only" option. With our package, we have 12months available to us of interest only payments if something REALLY fits the fan. This is a double edged blade, on one hand you are basically giving the bank money with no gain to you, on the other hand this might give you the time you need to get back on your feet from some sort of major financial even in your life.

Also make fortenightly payments rather than monthly. Jump on an online calculator and you'll see the difference it can make.

Beyond that, go see an INDEPENDANT financial advisor and they will be able to work out what the best course of action is for you.

http://www.yourmortgage.com.au/news/...ate-rises/5082

Have a read of that site, fairly high level overview of what to look for and think about. Give you a starting point.

[Troy711]

+1 for a broker for reasons previously mentioned. Also check to see if you can get the stamp duty concession if it's still happening.

[Deutscher]

my and my partner just built a home. we've just moved in 2months ago.

I don't have much advice to offer because it's our first home + we didn't have a choice in banks but do check the rates and also get familiar with fixed/flexible pros & cons before making a decision.

When we were building we were paying interest only (we were renting at the time, so paying rent + mortgage wasn't a option + we were 21).

We used the $21,000 for most of our deposit. We only needed $25k on a $360k loan. We went through a mortgage broker and she sorted it all out for us. We are with keystart (only lender that needed less than 10% deposit).

Also like someone else mentioned... do your repayments as frequent as possible!! We are doing payments weekly... if I could I'd do it daily. The quicker you pay it the less interest ur payin.

Don't do what I did. I had a credit card + owed my dad some money... I'm still trying to pay it back and man am I broke all the time. 52% of my wages go to mortgage (including bills + food), 30% goes to repaying credit card/dad ... leaving me with 18% to pay for fuel, credit, and other general crap.

[gopher]

go for a mortgage broker

also the mortgage insurers can be a pain in the ass.
when we bought ours (10 years ago i don't know if they've changed any since then )the mortgage insurer was giving us that much shit that we ended up putting extra money that we had saved to bring the deposit up to 20% to avoid the mortgage insurer altogether

Also like someone else mentioned... do Don't do what I did. I had a credit card .

my wife and i paid out our credit cards about 7 years ago closed the accounts and now use visa debit cards
much better

[Julie]

Like other I would echo the advice if you can't afford it when interest rates get high then you can't afford it. I would also suggest that you don't write off the big banks because they are evil like portrayed in media, some have very good deals when you get bargaining with them

[2DIE]

I remember seeing adds on TV where they find the best one to suit your needs and they don't even charge you because they get commission from the banks, no idea what the company's name was now though sorry.

[UFO]

a) make sure you've budgeted for extras.... legals, stamp duty, loan fees, inspections, variations (if building), and delays (if building).

b) when choosing your lender, dont just go with whatever the broker says. Ask why, and dont be afraid to keep asking questions until you are satisifed.

c) when choosing your lender, dont just compare interest rates (compare comparitive rates only, completely ignore advertised rates), but also features of the loan and their costs (like switching, exit fees, redraw, reval). Ongoing service fees are a biggy.... be very careful in agreeing to a loan with all the bells and whistles you will never use.

d) if you dont get a good vibe from the broker that comes to visit, get another one. And another one. And another one, until you feel like you are getting the correct info from someone in the know that you feel you can trust. Afterall, you ARE paying for their advice in trailing commisions or in intro fees that the bank gives them- regardless of the marketing that says 'free service'... nothing is free. You will pay for it eventually one way or another.

e) Most impotantly, DONT SIGN ANYTHING on the spot. Whatever advice or suggestion you get should be taken into consideration until you are 100% sure and have exhausted all options. If a broker wants a signature on the spot, tell them to jump! A lot have got he gift of the gab and will sound like they know everything.... but make sure you write everything down that you feel is important, and then ensure this is encompassed in the paperwork you sign.

Also, on a number of occasions in the past (both dealing with banks and brokers), paperwork sent to me to sign is wrong..... and it's wrong more often than not in one area.... The actual Loan Type/Name. Double check that what you are sold on is infact the product you are signing up to, because once that contract is signed sealed and delivered, switching will cost you. Is the term correct, is the loan name as it should be. Dont just take the word off a guy on the phone when checking.... if the loan name/type is different to what you want, get the paperwork changed.

[MasterOfReality]

1. Make sure you have the minimum deposit to avoid the mortgage insurance
2. Mortgage broker - go and see what they can come up with
3. Read the fine print
4. Budget 12%-15% potential interest rates
5. Be wary of fixing your rate - I fixed half of mine and its for 5 years
6. Smash as much as you can into the mortgage - for the first few years all you are paying is interest, so as much extra you can put in will make a lot of difference. Dont worry about mates giving you shit about not having the latest furniture or plasma - thats how we cut our mortage from 30 years to 5 years
7. Pay off your house quick smart and then watch all your mates get the shits when you go and buy up everything you sacrificed when paying the house off

[piston_broke]

Once you've sorted out your loan, look into an Off Set Account, put all your earnings into that, and live off your credit card, just make sure you pay off the full amount by the due date, and that'll bring the interest down a bit quicker.

[UFO]

7. Pay off your house quick smart and then watch all your mates get the shits when you go and buy up everything you sacrificed when paying the house off

Hmmm.... unless of course it takes you 40 years to pay off the loan, in which case most of your mates are dead, and buying an old Xbox 360 to impress those that are still alive will be a mute exercise because a) the old farts wont be able to see or hear it, and b) the Xbox 7000 has just been released for a bargain price of $10,500 (but still has overheat problems causing red ring of death- just like the old Xbox 360 from 40 years ago) .

[greenacc]

ING has some good cheap loans
Tell anyone who try's to sell you a loan with an annual fee to stick it up their rectum.

[MasterOfReality]

Hmmm.... unless of course it takes you 40 years to pay off the loan, in which case most of your mates are dead, and buying an old Xbox 360 to impress those that are still alive will be a mute exercise because a) the old farts wont be able to see or hear it, and b) the Xbox 7000 has just been released for a bargain price of $10,500 (but still has overheat problems causing red ring of death- just like the old Xbox 360 from 40 years ago) .

Heheheh, just sayin.

People should do the simple maths to see how much difference it actually makes and resist the temptation to keep up with others.

We are in a position now to start enjoying all the stuff which we didn't bother getting when we were paying off the house - and its really made us re-evaluate who we call friends. The same people that gave us shit because we didn't drive the latest Audi or BMW, or didn't have that $900k house in the city. And its the same people that crack the shits, or are visibly pissed when you go out and buy a King leather lounge, instead of a heap of shit from A-Mart. Or perhaps a Bose Lifestyle system instead of a Samsung piece of crap. Or perhaps a 3 week holiday in Europe when they just came back from Thailand. But it doesnt matter to us anymore - we enjoy ourselves and they struggle to maintain their mortgage whilst trying to keep up the illusion of living comfortably.

We have found some people are great friends with you, if you are poorer than them that is.

I used to think my parents were stuck in the past when they kept harping on about sticking everything into the homeloan, thank christ i listened to them.

[anonymousmoose]

As a first step, go have a meeting with a Mortgage Broker. That'd be my best bit of advice. See how all the different options compare. Plus they won't sugar coat a bank's product like the bank trying to sell it to you will.

Agreed yet make sure the broker isn't just after the big money. Every bank/institution they have on their list to borrow from pay them different rates. A not so good broker might try to sell you the loan that brings the most profit to him. By law they must disclose the rates they get paid but some don't do this until the very end and try to slip the paperwork under your nose hoping you'll sign before reading.

Also consider building rather then buying established. It can save you some money. Also I hear renovating can bring in good equity if done correctly.

I only have experience in building. My wide and I built a duplex style property on our first block so we can rent out the other half and get income. Our 2nd property will be pure investment.

Buying close to schools etc good. Both our houses are in short walking distance to a train station. It more desirable as we rent our half of the duplex and most enquiries we get are about the distance to the train station. When its time to sell, there is a good change the train station upped the value. My point is location is a key.

Dont buy anything next to or close to a homes west property. Just done do it. Real-estate agents and developers will tell you the government has rules for homes west tenants and it's ok to buy near them, but hey are just after your money because they know buyers with any clue will not buy there. They tried it on us.

/posted via mobile device\

[anonymousmoose]

I remember seeing adds on TV where they find the best one to suit your needs and they don't even charge you because they get commission from the banks, no idea what the company's name was now though sorry.

All brokers work this way. If they try to charge YOU fees of their own, walk away fast.


/posted via mobile device\

[anonymousmoose]

Hmmm.... unless of course it takes you 40 years to pay off the loan, in which case most of your mates are dead, and buying an old Xbox 360 to impress those that are still alive will be a mute exercise because a) the old farts wont be able to see or hear it, and b) the Xbox 7000 has just been released for a bargain price of $10,500 (but still has overheat problems causing red ring of death- just like the old Xbox 360 from 40 years ago) .

Thats a negative way to look at it. Make is 32 years old and is very close to paying off his mortgage. He bought a relatively small townhouse, nothing flash, with his brother. Then when they both paid off the mortgage by the time he was 31 he refinanced and bought the 2nd half from his brother. The guy lives very very cheap. A bit annoying at times cause he doesn't spend money to go out etc and drives and old toyota. But in a few years from now, he will be set for life. He could already positively gear his property.

/posted via mobile device\

[UFO]

Thats a negative way to look at it. Make is 32 years old and is very close to paying off his mortgage. He bought a relatively small townhouse, nothing flash, with his brother. Then when they both paid off the mortgage by the time he was 31 he refinanced and bought the 2nd half from his brother. The guy lives very very cheap. A bit annoying at times cause he doesn't spend money to go out etc and drives and old toyota. But in a few years from now, he will be set for life. He could already positively gear his property.

/posted via mobile device\

umm.... I think you missed the sarcasim in my post . I thought the "xbox 7000 for $10500" and still having issues like the current one was the dead giveaway .
Nothing wrong with paying off your mortgage quick mate, I completely agree.

[Jesterarts]

Not to hijack, but what are people's thoughts about "Equity Insurance" products?

It makes sense to be if you're in a position where you're planning on making money on the sale of the property in the near future OR when house prices drop say 10 - 20% and you have to sell for some reason then it will avoid a situation where you end up with no house but still an outstanding debt?

Thoughts?

[CSP]

House prices aren't going to drop any time soon (and it's not likely they ever will). Certainly Canberra is still on the RISE! Demand is far outstripping supply.

Given it's such a low chance of that happening, I wouldn't bother with insurance against it. Worst case is if it ever were to happen you'd file for bankruptcy. And I'm happy with it being such a low (near non-existent) risk for that to be my out if I needed it.