How to Find Real Estate Finance Services In Perth WA
When you’re buying a home, there are numerous important choices that you will have to make. One of them is choosing the right kind of home loan or Finance Services. In this article, we will discuss crucial factors that one must consider while choosing a home loan.
Size of Loan and Deposit
The loan to value ratio, or LVR, is the percentage of the loan amount against the actual value of the property that you’re purchasing. While an LVR of 80% or less is generally considered low risk by lenders, an LVR above 80% is considered risky by lenders. In the latter case, you will have to pay Lenders Mortgage Insurance (LMI). In other words, you would also have to pay LMI if you have less than a 20% deposit. LMI is a premium that gives a protection layer to the lender against a potential loss in case you aren’t able to repay your loan.
Type of Home Loan
The choice of your home loan should be based on the reason why you need the loan. For instance,
- if you need a loan to build a home, you should be looking at construction loans
- if you have a low deposit, you should go for low deposit home loans
- if you’re buying your first ever home, first home buyer loans should be your choice
- if you have bad credit, you can look at bad credit home loan options
You need to make a choice between fixed or variable loans. A fixed-rate home loan carries a specified interest rate for up to five years. In these loans, budgeting becomes easy since you know exactly the amount of repayments. These, however, offer less flexibility.
A variable rate home loan carries a fluctuating interest rate; it depends on the current interest rate in the market. Here, your repayments can increase or decrease according to the market interest rate.
It is important to understand what fees are charged on the loan before you sign up for one. The fees include but are not limited to:
- Application fees (one-off fee paid while applying)
- Property valuation fees
- Ongoing fees such as annual fees (for upkeep of loan)
- Late payment fee (default fee)
- Stamp duty
- Discharge fee (charged when your mortgage is paid out in full)
- Break fees (for switching loans during a fixed rate term)
- Lender’s Mortgage Insurance (LMI) (if there’s a small deposit on your loan)
You must also consider the features that different loans offer. These features include: The option of making extra repayments
- The option of making lump sum repayments
- The option to split the loan between fixed and variable
- The option to get home loan pre-approval
- A redraw facility that allows you to access any extra repayments you’ve made
- An offset account that allows you to put money into another account, thus reducing the balance on which the interest is calculated
- Repayment holidays that allow you to not make repayments on your home loan for a set period.
To navigate the complex world of real estate finance services, it’s recommended that you consult an expert in the field. We, at Escape The Rent, not only guide you to choose the type of home loan for you, but also help you avail the finance services along with government aid. Contact us here.