Top 8 Home Loan Questions
There are so many questions that home buyers ask when buying a property. Here we tackle the most common questions and concerns.1. Can I make extra repayments if I choose?
You may be fortunate enough to have times where you have extra funds to put into your mortgage, or simply want to make an extra payment. Depending upon the type of home loan you have you may be able to make extra repayments without penalty. If you have a fixed rate you probably wont be able to, but if you have a variable rate then extra repayments are usually allowed, although there may be restrictions on how much.
2. Are there penalties for cancelling or changing the terms of my loan?
Should you wish to change the terms of your loan or move to a different lender, you will most likely incur exit fees. These fees can be very high as the lender will seek to recoup what they may loose in interest from you. So for example, if you are in a fixed rate, and want to switch to a variable rate home loan because rates have fallen, your lender will charge you an exit fee to cover their losses. It may still prove worthwhile to you in the long run, but you must weigh up the savings against the costs and compare home loans before you decide.
3. Is my home loan portable?
Again, this depends on the type of loan you have. If you move to another property and want to keep your original home loan you will need to check the terms and conditions of your loan. It makes sense, as by keeping the same loan you can save the expense of changing loans and finding a new one. Usually, the more flexible your loan, the better chance you have of being able to move around.
4. Can I split my loan?
With a split home loan you can keep part of your loan at a variable rate, and fix the home loan rate for the rest of the loan. The loan is split for a fixed term, usually between one to five years. After this time you can renegotiate another split loan if the lender agrees. Split loans are popular when interest rates are uncertain, as you are able to make extra repayments on the variable part of the loan, as well as having the security of a fixed interest rate for the remaining portion of your loan. Fees will come on this loan type so be sure to find out what you will be charged to split your loan.
5. What is redraw?
With a redraw account you can make extra repayments and use the extra funds you accrue in the future should you wish to. When you make extra repayments you may be charged unless you have an account that allows for this. Then you may also be charged for redrawing, but if you have the right home loan with these added features then you may not have to pay a fee. You can redraw funds if you want to renovate, or pay for things like a holiday or a new car.
6. Can I top up at a later date?
Your home may accrue equity over time, as you make repayments to the loan or if house prices go up. You can also choose to look at refinancing although it can be very pricey, compared to a top-up facility with your existing lender. Depending upon what you really want the funds for, and for how long, these options are to be considered7. Can the home loan operate like a transaction account?
An offset loan acts similar to a transaction account. You can save funds and withdraw money from the one home loan account. Your can make deposits, such as regular salary, which will offset the amount of interest charged on your home loan. These accounts only really work if you are able to save substantial amounts into your account.
8. If I am ahead in repayments, can I miss a few payments?
Most loans will allow you to take repayment breaks due to other obligations. However not all loans will have this feature and it is up to the lender. The lender may usually only grant it for a maximum period of about 12 months. There may be a fee attached to repayment breaks. Depending upon the lender and the loan, you may be able to make repayments during the break if you are able to.
A mortgage broker is the one person who can answer all these questions and more. So call us today on 
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