Cheaper Home Loans

If you have your own property, you can build wealth with capital growth. However, you need to raise the funds to buy a property first. Home loans are vital, paying your home loan diligently will save you more money before interest rates increase once again. If you pay your loan in advance, you can even gain lower interest rates.

More home buyers are looking to refinance in 2011. Before you assess your home loan, you can also choose to speed up its term by doing a number of things. First, you can start saving small amounts and add them to your mortgage repayments. Saving $10 every day can amount to $5000 yearly or $133,000 in interest which can slash nine years of a 25-year loan. It is best to track down your spending to know the expenses that you can cut or do away with.

You can ask your lender to deduct the extra repayment that you made for the principal loan amount. Since interest rates are reverting to pre-global financial crisis levels, extra repayments can be easily made. Also, you can look around for better deals and speak with your current lender and see if they can offer a same deal, if you are not satisfied with the deal, you can opt to refinance.

Whilst paying off your mortgage, you can diversify your investment portfolio to gain more income. In return, you can use some of your extra income to pay off your mortgage faster. You may also use an online calculator to gear up for your mortgage repayments and check how much of your budget is devoted to your home loan.

The latest figures from the Australian Bureau of Statistics suggest that the first home buyer activity in Australia is in a steady decline. In 2010, government applications went down by as much as two-thirds as compared to 2009 levels. In 2009, a monthly average of 19,000 first home buyers applied for federal grants, taking up grants that amounted to $1 billion. In 2010, the monthly average went down to 7460.

Throughout 2010, there were about 35,000 first time home buyers that took out total grants of $344 million. Also, only a small portion of the over-65 population took the government incentive to transfer in smaller properties. In five months, about 7,300 individuals took the Home Builders Bonus that offers incentives such as the cancellation of the stamp duty fee.

Among all first home buyers in New South Wales, most of them where from the western part of Sydney in suburbs such as Liverpool, Kellyville, Hoxton Park and Westmead. Suburbs in the western part of Sydney generates first home buyer grant finances from $3.3 million to $7.3 million. Since the First Home Buyer Grant was introduced in July 2000, close to 500,000 homebuyers have taken grants amounting to $4.1 billion.

If you want to be a property investor, you must look out for hidden costs. First, you must be aware of all the costs that you must pay aside from the property purchase price. Most properties are tagged with stamp duty fees as well as title fees, registration fees, and mortgages to get funds for the house.

Of course, you will not buy the first house that you see. Since a lot of money is involved in the purchase, you would want to have it inspected first. Thus, you must pay inspection fees and if you have an architect inspect the design of the house and you can also have pest inspections or valuations which all costs money.

To protect your property against incidents that can cause damage or destruction, it is important that you take out insurance and make sure that your coverage is enough. Property insurance can include home and contents insurance, public liability insurance, contents insurance and building insurance. For those who have rental properties, they must have landlord insurance to cover them against tenant injuries.

If you purchased a property that has multiple owners, you might be asked to pay for owners’ corporation or strata fees monthly or yearly. These are charged to cover maintenance costs, security costs and for other expenses needed for property. The strata fee may also include the costs of amenities such as gyms, swimming pools, basketball courts and other recreational areas.

You must also have a contingency fund for all the repair or renovation projects that you may have to pay eventually due to wear and tear. For rental property owners, there might be times that the property does not have a tenant. Thus, they must have a contingency fund of at least a month’s worth of rental fees to pay other expenses such as mortgage, insurance and mortgage fees.

If you are a rental property owner, it is important to note that rental income declines in the long run due to strong capital growth. To avoid this from happening, you can divide your rental income with the property purchase price to get the same income annually. If you do not have the time to overlook your property, you can hire a property manager for a cost.

Finally, you must also have funds for your land tax. Though land tax is not charged in your main residence, you will have to pay this if you have investment properties. If you have many properties, never forget to pay your land tax to avoid charges on tax evasion.

The Variable Home Loan has the most flexible repayment term, for this reason it is the home loan rate that many borrowers apply for. Aside from a flexible repayment package, borrowers with this type of loan can also make extra repayments, redraw from funds and split loans between a fixed and a variable loan.

The interest rate of the Variable Home Loan is heavily dependent with the changes of the official cash rate that is determined by the Reserve Bank of Australia. Also, a variable interest rate has different features which mean extra fees. With varying number of features, standard variable home loans incur different rates.

If the cash rate decreases, so too does the variable home loan rate. During this time, you can make as many extra repayments as possible to shorten or ease up the term of our home loan. Since extra repayments are allowed in a standard variable home loan, you will not incur any penalties for extra repayments unlike in a fixed rate home loan.

Also, you take back these repayments if you need money for other reasons. In contrast however, the interest rate of this home loan will go up if the RBA cash rate goes up.

There are many features in the variable rate loan that are not available in fixed rate loans and although they are more volatile as they rely very heavily on the official cash rate they continue to be the most popular option for many borrowers.