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When choosing a home loan it is extremely important that you choose a product that suits your immediate and future needs. When using CBC Home Loans as your home loan specialist, we can assist in making sure that you have the right loan package for your needs. Let's have a look at the types of packages available:

'Basic Type' Home Loan

These products are generally offered by most financial institutions and provide a basic line of features with a reduced interest rate. These products are very popular and provide a great alternative to borrowers that don't require the 'bells and whistles' that the 'standard' products provide.

'Fixed Rate' Home Loan

Fixed rate loans offer security to borrowers in the event of interest rate rises. They can also hold you at a higher rate should interest rates fall. Taking a fixed rate option requires a lot of thought and really does depend on each individual's circumstances. Some people, due to employment situations, family constraints, or higher level of financial commitment require stability in their loan repayments for the future. Taking a 'Fixed Rate' home loan can provide some 'peace of mind' to borrowers.

'Standard Variable' Home Loan

Most financial institutions offer this product as their 'main stream' home loan. The standard variable home loan offers flexibility and is generally better featured than a basic product. This loan can also be mixed with other types of products to form a combination loan, such as part fixed and part variable. The standard variable portion offers many attractive features such as salary crediting, redraw facilities, off-set accounts, additional payments, top ups, construction loans and fixed rate options.

On the down side taking a fixed rate loan can mean that you may be paying a higher rate than the current variable rate. Additional payments to your loan are usually not allowed during the fixed rate term, so this type of loan is very inflexible.

It has become very popular to fix part of your loan and create a 'combo loan' with a variable rate product. This gives some security for part of your loan and allows you the flexibility on the variable portion.

'Line of Credit' facility

A Line of Credit is a revolving facility that allows the borrowers to reuse this facility at any time, once it has been repaid. The borrower can use any repaid funds right up to the original loan amount. The concept is not unlike a credit card, where you may repay and reuse any funds right up to the approved credit limit. This type of loan is very popular for the borrower that may require funds for future use such as investments, home renovations or wealth creation programs.

'All in one' loans

It has become popular for borrowers to use their home loan as their everyday bank account and have income paid directly into the loan. This type of loan is flexible enough to allow the borrower to withdraw surplus funds as required so that their money is making use of reducing interest charges for the time that it is held in the loan account. Again, borrowers opting for with this type of loan need to be comfortable and fully understand this concept to gain the real benefit of this facility.

Facts for the first home buyer

There are many things to consider when purchasing your first home. The experience can be very daunting, however with a smart approach and using the right people to assist, you can make buying your first home purchase very pleasurable. Some points you should know are;

Deposit

When purchasing a home for owner occupation, the lender will require you to provide a deposit. This amount is usually a minimum of 5% although some lenders may allow a deposit as low as 3%. Your contribution is required to establish some equity and also allow the lender to reduce the exposure in the event of default.

When purchasing a property the real estate agent will usually ask for approx. $1,000 as a holding deposit. Once you exchange contracts to buy the property, you are then liable for 10% of the purchase price, even if you are only providing a 5% deposit.

Genuine Savings

Most first home buyers have a 5-10% deposit. When applying for a home loan, the lender will require evidence that your deposit has been saved over a period of at least six months. To evidence this, you must show your bank account statements to verify your savings pattern. This is required to satisfy 'Mortgage Insurance' requirements. All loans in excess of 80% of the purchase price are required to be 'Mortgage Insured'. This requirement is strict and is not one that can be overlooked by any lender.

CBC Home Loans has access to loan products with no genuine savings as long as a full 10% deposit is provided by the borrower. Other conditions apply.

Costs

When purchasing your first home it is particularly important to be aware of the associated costs that are incurred. A short fall in costs prior to settlement can cause a great amount of turmoil and frustration. At CBC Home loans, we ensure that all our clients are aware of the costs involved in the purchase so that there are no nasty surprises.

Building & Pest Report

Most property purchasers take the opportunity prior to entering into a contract with the seller, to obtain a Building and Pest report on the property. This will provide you with peace of mind as to what you are buying and will also highlight any structural or building defects. A full Pest Report will detect traces of pests that may be present or attacking the property. This usually cost around $700 - $800 each.

Legals

The Canberra title system is very modern, using the Torren's Title System. Whilst it is possible for a purchaser to complete the purchase transaction themselves, we recommend that a solicitor is consulted to under take this task for you. You will find that this money is well spent to ensure that you have all your legal requirements in order and that the purchase is completed within a timely manner. We recommend Dickson Legal, Trevor Barker, (02) 6248 8085.

First Home Owners Grant (FHOG)

The Commonwealth Government is currently providing cash incentives for first home buyers to purchase property. To be eligible none of the applicants can have previously owned a home anywhere in Australia. If an applicants spouse or de facto has previously owned a home, no grant will be available. At this stage, the scheme is not means tested either by income, assets or property valuation. For more information go to www.revenue.act.gov.au . ACT specific information including an application form can be found at the ACT Revenue Office website.

Most lenders are now agents for the FHOG and can take your application along with your home loan application.

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