Many people who consider purchasing their first home gets overwhelmed by the myriad of financing options to them and the providers pining for their attention. Applying for variable rate home loans is now easier than ever if you meet the right conditions.
By taking the time to do research on the basics of property financing, you can save a lot of time and money. Your knowledge of the specific market where the property is located and whether it can provide incentives to lenders. You should also look at your own finances to know that you’re getting the mortgage that will best suit your needs.
Check the financing options available for you:
Conventional loans. Conventional loans are fixed-rate mortgages that aren’t guaranteed or insured by the federal government. This type is the hardest to qualify for because of the requirements for criteria, which includes down payment, income, credit score, other costs, such as private mortgage insurance.
Introductory rate loans. This product is aimed at first-time homebuyers and one you’ll likely come across often. Also known as honeymoon loans because of the honeymoon period where you pay a discounted interest rate, these loans generally offer a cheap rate initial, designed to catch a home loan hunter’s attention. This can take one of two forms, the first is a fixed discount and the other is a discounted fixed rate.
Construction loans. As the name suggest, this sis a type of loan that you can utilize if you’re starting from scratch with your home. When starting to build a home, you won’t need the entire amount of the loan all at once. Doing so will make interest repayments on the entire amount bigger from the start. Construction of a new home is typically divided into five stages as follows:
- Land purchase
- The pad/floor also known as the bearer and joists for wooden floors
- Roof, including frames
- Lock up
Through a construction loan, you’ll be able to break up the drawdown of your loan amount into the mentioned five stages, which corresponds to the repayment phases. As you complete a phase of the construction, you can then draw down the next portion of the loan.
Most lenders will usually lend only around 60-65% of the land value to purchase, and this is typically done as a land loan. Lately, however, some lenders are starting to lend up to 90-95% of the land value, so it’s a good idea to consult with a lender how much they can lend you.
Professional packages. Another product type you can find strongly marketed is the so-called professional package. Most of the major lenders offer some special packages for borrowers who wants to take up $250,000 or higher, while some discounts are also given on mortgages from $100,000.
Initially designed for those who earn high or borrowers in a specific profession, the products and services bundled in the professional package include:
- Discounted interest rate if you’re applying for variable rate home loans
- Up to four credit cards without annual fee
- Free/discounted offset and savings account
- Discount on insurances
- Fee waivers and reductions on valuations, switches and top-ups
Whether you’re looking to purchase your first home, refinance, build from scratch, or invest n a property, a mortgage broker can assist you. Of course, not all financing options are in this article, there are many out there – but these are the basics so start with these first before looking for other types. Best of luck!