Picking the right mortgage

This article is part of a series bought to you by ALLSTORAGE SELF STORAGE. For drive-up easy storage at 1/4 city prices; in Warwick contact Harcourts Real Estate Phone 07 4661 3999; Stanthorpe contact Cec Mann & Co. 07 4681 4444; Glen Innes contact Robyn Willis Real Estate. (02_ 67321855. Or visit www.allstorage.com.au. We pride ourselves on providing qulity, value-for-money storage.


HOW TO CHOOSE THE RIGHT MORTGAGE
If you’ve been reading along, you might wait some help on choosing a mortgage.
House prices according to Stanthorpe Agent Cec Mann and Co. range from $170K , while in Warwick they are typically from $200k. These prices are far lower than the coast or metropolitan areas, but when you add in the cost of interest over the life of the loan, it makes picking the right mortgage even more important. Housing supply is short in both towns and most builders are still booked out well into the year.

General Facts
• Home loan repayments of principal payment and an interest component. are usually made either fortnightly or monthly over the term of your loan (typically 20-30 years) Best to avoid going over 20 years.
• The more often you make repayments (ie fortnightly) and prepayments the less interest you will inevitably pay.

Rates
Do a Google for Cannex interest rates - it is a free service.

Variable Rate Loans
• Broadly, interest charges are usually adjusted every 6 or 12 months and carefully monitored by government as home loan rates are a key economic driver and a touchy political subject!
• As variable rates change, your repayments will change or the term extended.
• You can usually make extra repayments or early repayments without incurring any penalties, and your repayments can be changed if your interest rate falls or your circumstances change. For most people, home loan interest is not tax deductible, so prepayments are a sound “investment”. However, varying repayments will make budgeting harder, and may strain your finances.
Fixed Rate Loans
• Normally these only have a fixed interest rate for 2 to 5 years, which is then renewed, or swapped to another home loan type.
• The advantage of this type of loan is that an unexpected rise in interest rates will not affect your repayments. Of course, if interest rates fall, you may find yourself paying a higher rate of interest than the market. Its worth remembering that low stable interest rates are regarded as good government practice.
• With fixed rate loans, it is common to be penalised for making extra repayments or for changing your home loan, swapping it to variable or your lending institute.
Honeymoon Loans
• Known as capped rate loans or honeymoon rate loans, this type usually apply for 12 months, after which interest will be charged as a standard variable rate.
• You'll have the benefit of a lower rate in the 12 months and lower repayments to help furnish the house, but be careful this doesn’t mean than when the loan reverts to a variable rate, you risk paying a higher rate of interest than market.
• Also, the benefit of a low start loan only runs for a short period, and when the full interest cuts in, you may struggle financially.
Split Loans
• Split loans give you the opportunity to average the risk and split your home loan between fixed and variable interest rates. You'll still pay when interest rates rise, but, not all your loan will be subject to the higher interest rate.
• Check whether the lender treats split loans as two separate loans and fees and charges will drive up your overall payment.

Government Assistance
• First Homebuyer subsidies are $14,000 for new homes – it’s a hard call whether the Government will use ever use these grants to kickstart the building industry again, but they have a dynamic effect.
• you may be eligible for further government assistance from the State (esp. Victoria) and/or Federal Government ( eg stamp duty concessions)

Offset Loans
• Some institutions will allow of your normal banking account and loan account to be combined into one account. This means your current balance offsets the size of your loan, thus reducing interest repayments and making a ongoing saving.
Redraw Facility
• With a redraw facility, extra payments that are made to the lender can be withdrawn later date to pay for things such as a renovation or new car. Of course extra repayments you reduce the amount of interest you will pay over the term of your loan. This feauture is well worth having as long as you don’t pay a premium.

Home Loan Offset Account
• This is a linked savings account which uses the generated interest to offset the principal sum of the loan, thereby reducing interest repayments.
• The interest generated is tax free, and money can be withdrawn from your account when needed.

Home Equity Loans
• A home equity loan gives you the opportunity to consolidate your debt into one loan and so reduce the interest repayments on your debt overall.
• It acts like an overdraft on your home loan and gives you credit up to the value of the equity in your home. For example, if your house is worth $200,000 and you have a $150,000 home loan, your equity or line of credit will be $50,000.
• You will pay a higher rate of interest on your home loan when compared to a standard variable loan, but a lower rate of interest than an overdraft.
• Check first whether your current lender will simply increase your existing loan at the same rate!

Fees and Charges

When you take out a home loan, there are many government and institution fees and charges.
Make sure you find out exactly what you'll be required to pay. In Queensland search for osr stamp duty calculator.
Some of the most common fees and charges include
Establishment Fee
This is your loan application fee, and covers the establishment and valuation fees plus the cost of processing your application.

Ongoing Fee
Also called an Administration Fee, this covers the charges for account keeping and any bank transactions. You'll pay between $3 to $10 each month, payable monthly or quarterly.

Late Payment Fee
This is the penalty incurred when a repayment is late. The fee will be 1-3% of the due payment, levied on top of that payment.

Stamp Duty on Mortgage(Home Loan)
State governments charge stamp duty on the transaction of taking out a loan, usually 0.3-0.4% of the loan amount.

Mortgage Insurance
If you borrow more than 80% of the value of your property, you'll undoutetly be required to pay mortgage insurance. This protects the LENDER in the event that you fail to repay the loan and your property is sold for less than the amount remaining on the loan.



Good luck! We hope you make a successful move to our region and look forward to meeting your storage needs.☺