When you are looking around to choose a home loan, it can be helpful for you to use a “Home Loan Checklist”. It will help you make a decision that will suit your needs and circumstances. You can use the checklist for any purpose, including:
>> Buying your first home;
>> Refinancing your existing mortgage;
>> Consolidating your debts
>> Cash out/equity release;
>> Buying an investment property;
>> Constructing your new home; or
>> Upgrading or renovating your existing home.
You can also use the checklist to avoid applying for loans that don’t suit your particular needs or circumstances.
Ask your Lender/Credit Provider for a copy of their Key Facts Sheet
While doing your research, the best way to compare home loans is to ask different lenders/credit providers for a copy of their “Key Facts” sheet because it will tell you:
>> The total amount to be paid back over the life of loan;
>> The repayment amounts and payment options;
>> The fees and charges payable; and
>> The comparison rate which will help you check the total cost of a home loan against other home loans.
What is Included in the Home Loan Checklist?
Here is a list of things you should look out for before you sign up and which are included in the Home Loan Checklist.
1. INTEREST RATES
This is where you need to know details of the interest rate percentage (%) charged by lenders/credit providers for any of the following home loan options, including the comparison rate:
Variable Interest Rate Home Loan
With this option, the interest rate increases or decreases in accordance with the rates in the marketplace.
Fixed Interest Rate Home Loan
With this option, you may elect to fix (lock-in) an interest rate typically for 1 to 5 years.
Split Loan (Combined Variable/Fixed Interest Rate) Home Loan
This option allows you greater flexibility because you may elect to divide your loan into a number of splits. For example:
>> You can arrange for one split loan as a variable interest rate; and
>> You can arrange for another split as a fixed interest rate.
Introductory (Honeymoon) Interest Rate Home Loan
At the start of a new loan, you may be offered an interest rate for an introductory or honeymoon period which is usually at a lower rate. However, at the end of the honeymoon period, the loan will eventually revert back to a standard variable rate. mortgage rates
You need to check the Key Facts sheet for comparison rates. As the comparison rates will help you to easily compare the total cost of loan against other loans, including:
>> Interest rates;
>> Application fees (sometimes also called the establishment, set up or upfront fees); and
>> Ongoing fees.
2. REPAYMENT OPTIONS
This is where you need to know what repayment options are available to you including:
You need to know if you can make additional repayments which are in addition to your normal minimum monthly repayments.
You need to check the Key Facts sheet to find out if you can make extra lump sum repayments over and above your contracted loan repayments. You will also have to check whether you can then redraw (withdraw) these extra funds from your loan when you want them. You may find that in some cases, lenders/credit providers may not release your redraw funds when you want them.