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
'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;
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.
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
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.
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.