Don’t know the difference between lenders mortgage insurance and loan protection insurance? Confused by how the First Home Owner Grant works? You’re not alone.
According to Bendigo Bank’s Ballarat Central Branch Manager Karen Young and Relationship Managers, Jim O’Connell and Michael Salter however, the more first home buyers educated themselves, the less chance they’ll make a decision they regret. “There are a number of steps people should work through before they apply for their first home loan, and each can have a significant effect on their mortgage amount and repayments.”
Here are their tips for a regret-free home loan:
- A big deposit is ideal, but there are other options.
While borrowers’ circumstances will affect the amount they can borrow, all will require lenders mortgage insurance (LMI) if their deposit is under 20 per cent of the purchase price.
LMI protects banks should a borrower default on the loan, and is paid by the borrower. This is separate from loan protection insurance which borrowers can take out if they want to ensure they can maintain loan repayments in case they are unable to work.
This advertising feature is sponsored by the following businesses. Click on the links to find out more:
So is it better to wait and save a larger deposit to lessen your overall mortgage and avoid paying the extra LMI fees? The answer will depend on your circumstances, your current savings and how quickly you want to enter the real estate market. For some, the risk might be housing prices will rise by more than the cost of mortgage insurance today. Be realistic about your priorities and what you can save while still enjoying your life.
- First home owners can receive grants and stamp duty reduction.
Lenders can help you understand the first home owner grants available and lodge the application on your behalf. A first home owner grant could get you in your new home sooner.
- Shop around for specialty products that match your circumstances.
The best loan for you may not have the lowest interest rate available. The features and service you receive may be more important. For example, the cheapest loans often won’t let you make extra payments. And discounted or honeymoon rate loans often have the highest application and ongoing annual fees.
Many banks have specialist products that may save you money. “At Bendigo Bank we have an innovative new product called Bendigo Connect. This allows you access to up to 0.15 point rate reduction plus other benefits, if you bundle other products with us, like credit cards and insurance,” they said. “Do your homework and make an appointment with a home loan specialist early on to find out if there are products that meet your needs.”