Now, we’re back! Taking out a mortgage is exciting, but there are a few things you need to know to ensure you are on the right track. Otherwise, you could end up with bigger debts in the future; so, it’s best to be sure. This is the second part of our post, and we will go deeper into what you need to know.
Look Into the Features
There are different types of mortgages, and each one comes with various features. That’s why you need to know these features before you sign on the dotted line.
- Variable and Fixed Rates: A variable interest rate can change at any time and usually moves in line with Reserve Bank decisions regarding the national cash rate. Therefore, your interest will fluctuate throughout your mortgage period. On the other hand, a fixed interest rate means the interest rate will stay fixed throughout your mortgage. However, you could miss out on cheaper rates with fixed rates as there are instances when variable rates are lower.
- Loan Terms: Consider the repayment terms for your loan as this has a huge impact on how you will pay for it. Of course, the shorter the loan term, the higher the repayments will be, and vice versa. Today, most borrowers look for 15- to 20-year periods for more breathing room to pay off their mortgage.
- Early Repayments: There are opportunities to pay off lump sums of mortgages. This is enabled within the loan to retire the loan before its completion time.
- Repayment Frequency: You can choose how you can repay the loan. Choose a schedule you’re most comfortable with. You can make repayments weekly, fortnightly, or on a monthly basis.
Know the Costs
There are a lot of costs associated when taking out a mortgage, and sadly, most of them go overlooked. Don’t commit the same mistake; familiarise yourself:
For one, stamp duty is one of the costs you need to pay when you take out a mortgage. This is a tax on property transactions charged by each state and territory. With that, the amount of stamp duty will vary depending on where the home is. It will also be influenced by the property value and whether the property will be your primary residence.
Another cost associated with taking out a mortgage is the transfer fee. This is paid when you transfer ownership of the property to the buyer. The fee varies depending on the property. There’s also the mortgage registration fee you need to think about, which is when the buyer pays for the mortgage registration under their name.
Legal or conveyancing fees are part of the process as well to ensure all legal aspects are covered before you seal the deal. There are also mortgage application fees you need to think about, and this will depend on the lender.
Finally, inspection fees are very crucial, and they can also cost you a lot of money. However, you shouldn’t skip this because it will help you guarantee that the property you plan to buy doesn’t have any major problems.
Ready to Move to Your New Home?
That’s it! These are some of the most important things you need to know before you take out a mortgage. Are you ready to make that move? Yes, you are!
If you’re looking for the best mortgage as a first-time home buyer, Wealthy You is here to help you out. We are an alternative lending specialist that offers the best home loans in Sydney. Contact us today!