All Mortgage Brokers are not born equal. Like any service business, the quality of brokers’ offerings can vary from company to company and from broker to broker. This article will explore the qualities that you should avoid in a potential mortgage broker. Use this information to find a broker that will take the time to understand your situation and secure a mortgage product that’s right for you.
In order to avoid being ripped off, you need to take your time and compare mortgages from a few vendors. This needs to be done correctly, if you desire a good result. You should also understand that the type of mortgage you choose will go a long way to determine the rate you pay. Other factors that might impact on rates include your deposit, credit rating, and others. Listed below are some of the steps that would help you engage in successful and great comparison shopping. They are as follows:
Paying off a mortgage results in more than just owning a home. The value of your home is a form of savings that provides negotiating power for other loan arrangements or investments. For many people, the downside of making regular mortgage repayments is the lack of ready cash or additional savings potential. A home equity loan can provide the solution, by allowing home owners to borrow money against the value of their home. This money can be used for any number of home improvements or other purposes.
Owning a home remains an achievable ideal for most Australians. Values have soared, but it’s worth noting that many sought-out neighbourhoods were fairly humble settlements just a couple of decades ago. Interest rates also remain low, often at 4% or less, providing lower repayments and a positive outlook for prospective home buyers.
The initial climb onto the property ladder can be slow, but wages do incrementally rise, and every passing year sees an increasingly large chunk of the outstanding loan principal paid off. During this time, the value of your home (investment) will significantly increase, and maintaining that investment could involve an injection of serious cash. A home equity loan is the answer.
What is a home equity loan?
Firstly, home equity is calculated as the amount you owe subtracted from the value of your home. In other words, if your home is valued at $400,000 and you owe $100,000, your home equity is $300,000. This is potentially the amount you could borrow, taking into consideration your ability to make repayments for the term of the loan.
The rules governing home equity loans in Australia are relatively simple. If you have commenced paying off a mortgage and possess over 20% equity on the property, you have a good chance of a home equity loan approval. The amount you can borrow is also determined by factors such as income and personal finances. Any encumbrances on your property could also affect the application.
What is a closed-end home equity loan?
A home equity loan can be either closed-end or open-ended. A closed-end loan is ideal for making a single purchase with a set amount of money. In essence, a closed-end loan is a lump sum payment with similar conditions to your initial mortgage, and is often used for major home renovations. An open-ended home equity line of credit (HELOC) is best if you require ongoing funds that are available to replenish and redraw upon, similar in function to a credit card but with greater borrowing power.
Home equity loan benefits:
Tight finances determine the need for frugal budgeting for first home buyers, but there are some relatively easy ways to cut yourself a little slack, especially if you are capable of undertaking some DIY projects around the home. You can save thousands of dollars, and with every dollar counting, it could mean the difference between affordability or giving up altogether. Here are some quick fixes to get you started.
Learn a little plumbing
One time, while watching a plumber join some poly pipes underneath my home, I remarked, “wow, that looks easy enough. I should have tried to fix it myself.” The plumber swivelled around in the confined space and replied, “don’t tell anyone how easy it is or I will lose a lot of work.” I paid him the full price for a job well done on that occasion, but after handing over the $300 I decided to apply myself to learning a little more about basic plumbing for future minor issues around the home. I have since saved thousands of dollars on call-out fees alone, but still call in the experts for difficult tasks requiring a qualified trades person.
By learning a little plumbing you can perform regular checks in and around the house. The savings will add up, and you will earn bragging rights with your neighbours and friends.
Electricity is an essential power source for almost every household. It is also a very dangerous field to work in, with most jobs best left to the professionals. There are however, some easy tasks that even a novice can perform, such as changing to power saving light bulbs and making a determined effort to switch off all appliances when not in use, even if they are in idle or sleep mode. For those who are a little more adventurous it’s an easy next step to change broken electrical outlets or install ceiling fans. These few tasks alone can save hundreds of dollars per year for an average household, while adding value to your home.
Beat the technology bugs
A significant portion of a home ownership costs are dedicated to technology items. It’s surprising how many people don’t invest in protection of devices such as computers and smart-phones. The expense of repairing a faulty device is magnified many times over if the device plays an important role in your occupation or earning power.
Every computer owner should install security malware apps and keep them updated. Electronic repair is expensive, with costs varying wildly depending on the problem. Take the anxiety out of electronics by protecting them from viruses or threats of compromise. Security will not only extend the lifetime of your devices but also add up to big savings over time.
Adventurous home-owners have more resources available than ever before regarding DIY hints and tips. From painting walls, tiling floors, hanging doors and establishing gardens…the list for possible savings is endless, what to speak of increasing the resale value of your property. Potential DIY savings could be just the stimulus you need to make a confident entry into the housing market.