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Guide to Selecting the Right Home Loan

Home loans are an important part of buying a house. Some people might even say that getting the right home loan is even more important than getting the right property! Unless you are one of the tiny proportion of people who can afford to buy a house outright, you are going to need a home loan so it is well worth investigating how they work to make sure you get the best deal. In this article we will discuss the basic mechanics of a home loan so that you are informed when deciding which lender to take one from.

What is a Home Loan?

A home loan is an agreement between you and a financial institution that is loaning you a sum of money to purchase a property. Say for example you want to purchase a house which is $700,000 but you only have half of that amount available to spend on a house, you can organise a home loan to cover the extra $350,000. The lender then organises a repayment plan so that you can pay them back for that loan, including interest. In practice this means you will end up paying the lender more than the principle, although how much more depends upon many factors.

Investigate Your Options Thoroughly

Buying a house is one of the largest investments you may ever make, so do it carefully. Investigate all of the options available to you, including specialist mortgage lenders, credit unions and banks. There is no silver bullet home loan that is going to be perfect for everyone, and remember that the people offering to lend you money are going to make money from the transaction in the long run so they may not necessarily have your best interests at heart when it comes to defining the terms of the loan. Make sure you gather fact sheets from the different lenders you speak to so that you can confirm the loans carefully.

Interest only versus Principle and Interest Home Loans

A principle and interest home loan means that your structured payments work to reduce the size of the outstanding loan, the principle, and also pay off the interest on that principle. This means that if you make all of the structured payments over the duration of the loan it will be entirely repaid. An interest only loan arrangement means that your structured payments only account for the interest on the principle you borrowed in the first place, and extra payments need to be made to reduce the size of the principle. However, interest only may work in your advantage if your financial situation doesn’t allow room for you to pay off principle just yet.

Offset Account and Redraw Facility

An offset account is a savings account that is tied into your home loan account. The balance of your offset account acts to reduce the size of the principle and therefore reduce the price of repayments. However an offset account will only save you money if it remains at a particular level and if it drops too low you will likely incur extra fees.

A redraw facility is a stipulation of a home loan agreement that lets you pay extra into the loan and then withdraw it again later on. An example might be having your entire pay put into the loan and then paying bills or withdrawing money from the loan.

Portability

Portability is important if you are likely to move house before the home loan is repaid. It means you can transfer your home loan from one property to another, although just like an offset account and a redraw facility, extra features can mean a more expensive loan and higher fees.

When you have Established Your Home Loan, Talk to New Living Homes about a House and Land Package

New Living Homes is one of the Sydney area’s most professional builders. Call today on 1300 366 766 or contact us online to talk about a home and land package for you and your family.

Testimonials

Building a New Living Home has given me confidence that I can easily embark on building a home rather than buying a place, and get a better house/ home rather than a small flat. But you have to choose a builder that KNOWS how to build, that builds exactly how the design dictates. A builder who can deliver what they say, when they say. A house that won’t look daggy in years to come is important too, and New Living Homes did just that. The overall investment has worked out well too, growing in value is a short period of time.

G.Pace

”The idea of our brand new home is still really sinking in as we never dreamt of building or ever own. A VERY big thank you to New Living Homes for giving us a brand new home! You’ve made our dreams real!”- Grevillea 4.1, Elegance Facade

L & M King

We would just like to say a massive thank you once again for all your help with the house. We moved in on the weekend and we are loving it ! So thank you for being part of the team that made our dream come true.

Belinda, Jordan Springs, Acacia 4 Urban

I love that my new home is mine!!!! There is nothing I don't love about it. The finishes are great and it is just perfect! I love showing it off to people and all of my friends and family love it and always compliment the design and workmanship.

B.M - Spring Farm  

‘’From the very beginning, our experience with New Living Homes has been nothing but amazing. From our very first meeting at Spring Farm, to the accounts team, to the pre-construction team, and our Construction Manager on site, nothing was ever an issue, or a question too stupid’’.

Rebecca & Steve - Jordan Springs 

‘’I have been extremely happy with my experience with New Living Homes and have told anyone and everyone about our build. Everything went smoothly and yes there were a few problems but our site manager sorted them out as quickly as he could.. Throughout all the build, nothing was too much trouble for our site manager’’

Debbie & Brian - Jordan Springs 

After hearing some horror stories of people building their homes we were fairly nervous to see how it would all
unfold however from the very first dealing with New Living Homes we could not fault a single thing. I would like to
give special mention to Emma from the Brooks Reach Display who was very accommodating with us pestering her
with what seemed like every week as we would be checking different things in the display home.

Tim & Kara - Flinders

My experience was excellent. This was the second house I have built in 4 years and the whole experience was a pleasure from start to finish. All of the sales team were very helpful and very responsive to each and every enquiry I had.

Damian & Lauren - Spring Farm 

Building with New Living Homes has been a pleasant and enjoyable journey so far, and we know we have Sandra to thank for this. Her customer service is second to none, and has made all the difference in building this time round. My husband and I just wanted to make sure recognition and praise was given where it is due. Thanks again for everything Sandra! We are looking forward to more builds with NLH. 

D.E, Marsden Park 

I always thought that building a house in Australia would be a nightmare like everyone told me but it was more than a pleasure as I was never troubled about anything. The process was as smooth as a butter.

Thank you guys, its because of your amazing team work, good flow of communication and the zeal to work hard to let people achieve their dreams, has gotten us what we really wanted. -

Monika & Mayur, Elara 

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