Getting my first home loan.Anything i should ask

[maza]

Hi everyone.

Im in the process of getting my first home loan.I havent signed anything yet, just making sure im making the right decision before i submit anything.

I earn a good wage in a good job and plan to borrow $200,000 over 10 years.

Repayments are around $2100 month.

Is there anything i should be wary about regarding bank loans, any tips or advice regarding home loans?

Any questions i should ask the bank?

They want me to pay monthly, but a friend of mine said it is better if you pay the loan forthnightly, that way you wont accumulate interest, etc.

Is this true?

 

[The Y-man]

Ooooo.... where to start....

Is it for your own home or an investment property?
Why a limit of 10 years?

Cheers,

The Y-man

 

[Propertunity]

They want me to pay monthly, but a friend of mine said it is better if you pay the loan forthnightly, that way you wont accumulate interest, etc.Is this true?

Hi maza,

Congrats on the decision to buy your own home.

If your goal was to own you home sooner and save in interest, then paying fortnightly is a way to go. The savings come a little bit from interest on the 2 weeks you are ahead (of a monthly payment) but most saving comes from the fact that there are 26 fortnightly repayments made in a year (13 monthly) compared to only 12 monthly repayments - so you are in effect paying an extra monthly repayment per year.

If you want to make other IP purchases, then you would use a different strategy altogether to conserve cash flow. But that is a whole 'nother topic.

 

[marg4000]

Please check exit fees. You may plan to hold the loan for 10 years but often life gets in the way. Many loans these days carry a hefty penalty if paid out before 3-5 years have elapsed. Just be sure you know ALL the possible fees.
Marg

 

[maza]

It will be my home.

Looking to buy a home for about 500k, i have most of the money, just need about 200k more.

 

[The Y-man]

Ok, your questions are mainly going to be around fees, fees and fees (ongoing, early exit, etc etc etc etc )

Cheers,

The Y-man

 

[mja]

Hi Maza,

Get a loan over 30 years, not 10. Think long term picture. Life can get in the way sometimes. Will it be your home forever? Will you leave this home and upgrade to another one down the track?

 

[maza]

Hi Maza,

Get a loan over 30 years, not 10. Think long term picture. Life can get in the way sometimes. Will it be your home forever? Will you leave this home and upgrade to another one down the track?

I dont think the home i purchase will be my home forever.I may live in there for few years then move to something better.Im not to sure, the road ahead.

been renting for 5 years, paying $300 week.Why do that when i can pay $500 a week and hopefully own my own home.

My aim is to pay off the mortgage quick.

 

[Propertunity]

been renting for 5 years, paying $300 week.Why do that when i can pay $500 a week and hopefully own my own home.

Yep - agree

My aim is to pay off the mortgage quick.

Why do that if you intend to move onto something better later on? You could turn this PPOR into an IP and have the same mortgage against it which is now tax deductible.

 

[The Y-man]

My aim is to pay off the mortgage quick.

That's ok, but you can keep your options open by getting a 30 year loan with offset, so that you can effectively "pay it off" and pay no interest, but still have it available to draw down on.

Remember to that you can do a security swap on loans, so if yo move, you don't necessarily have to close the loan - you can swap the property the loan is secured against (assuming it is of same or higher value)

Cheers,

The Y-man

 

[Collector]

I dont think the home i purchase will be my home forever.I may live in there for few years then move to something better.Im not to sure, the road ahead.

been renting for 5 years, paying $300 week.Why do that when i can pay $500 a week and hopefully own my own home.

My aim is to pay off the mortgage quick.

Depending on your habbits - some people can not save - they live week to week and can only save by being FORCED.

I used to be like this; and if you are then sure take the loan over 10 years - that way you are FORCED to make the payments/save.

If however you wont be tempted to get access to your savings then IMO the best set up would be:

> I/0 loan with offset account (30 year term)
> Place all income into offset account and only access the funds when needed

This would allow flexibility and enable you to adjust to circumstanes as they arise.