Overview of Home Loans
Perth is a beautiful city with a rich culture and exciting opportunities everywhere. Coupled with the current low interest rates, this is also an excellent area for first time home buyers or those looking for investment properties.
Getting a home loan in Perth will be one of the biggest decisions that you ever make. However, it can also become very stressful. From choosing the right lender to deciding on the most suitable home loan rates, the sheer amount of information available can be overwhelming
Our online home loan brokers in Perth give you more details about the many different types of home loans that are currently available, allowing you to compare home loans and find the most suitable loan to your needs:
Fixed rate home loans: This loan option simply means that the interest rate remains constant. What makes this loan attractive is that borrowers are able to know exactly what their monthly mortgage payments are. This option is ideal as you can lock in a great rate for the entire loan if you qualify.
Variable home loans: These home loans have interest rates which are directly tied to market rates. This means that the mortgage payments can vary and can be beneficial for the borrower when loan rates go down. As the interest rates are variable, payments will also increase as the rates move upwards.
Low deposit home loans: These types of mortgages only require a 5% deposit of the purchase price of the property. This deposit can be made with genuine savings, an inheritance, a gift from a family member or even with a recent tax return.
Line of credit home loans: These home loans function like a credit card. You can withdraw funds up to your limit, as long as payments are made on a monthly basis. These home loans are perfect for investors as they offer flexibility within your mortgage.
Shared equity loans: Equity finance mortgages (EFM) contribute up to 20% of the purchase price of the property with the other 80% covered using a regular home loan. Mortgage holders can opt for this option to increase their borrowing capacity and to reduce their monthly payments as it is not required to pay the EFM portion for up to 25 years.
The number of Perth home loan options out there can be overwhelming as each has its advantages and disadvantages. This is why it makes sense to work with experienced home loan brokers or closest to the area you reside in who can help provide you with expert advice and guide you through your financing options, every step of the way. This lets you know exactly what to expect from your loan and how you can get the best home loan rates in Perth
Prepare Your Finances
Before you apply for a home loan, it’s important to carefully review your finances so you know just how much you can afford to borrow and whether you are ready to take on a mortgage. It also makes the application process much easier.
- Review your credit report: Lenders review your credit history to assess your creditworthiness and what rates you can qualify for. Bank errors on your report need to be addressed immediately as they could be affecting your ability to get the rate you want.
- Calculate how much you can afford: Decide on the kind of home you want to buy and how much you can realistically pay. Start by taking an honest look at your income and what your current expenses are. Then use a home loan calculator to determine what your mortgage payments will be like.
- Determine a down deposit: The next step is to determine your down deposit. This should be at least 5% of the total purchase price of the home, although putting down more of a deposit can qualify you for a better rate and even lower your monthly payments.
- Get pre-approved: Knowing the amount you can afford for your home loan in Perth does not automatically qualify you for that amount. Getting pre-approval from a lender simply means that you qualify for a certain loan amount based on the information you provide.
What Lenders Look At
Qualifying for a home loan is a rigorous process that takes a tremendous amount of time and effort. Lenders look at a variety of factors to assess your financial ability to repay the loan. Anything that shows you are a financial risk will likely result in a rejected application.
The following factors determine the rates you can qualify for and how much you can borrow:
- Credit score: Your credit history is an indication of your financial background. The higher your score, the better as it shows you have worked hard to improve your credit.
- Financial obligations: Lenders expect most borrowers to have some form of debt but having a high debt to income ratio can also affect your rates.
- Income stability: Your employment history will be reviewed carefully to assess how stable your income is and whether you are in a position to afford mortgage payments.
- Deposit: Generally the amount you can put down on the purchase price of the home should be at least 5%, although we recommend putting down more of an amount as this will increase your chances of qualifying for a better rate.
Lenders look at all of the above including the value of any assets you currently hold. Perhaps the most important are the stability of your income and your down deposit. Lenders need to be sure of their investment. Proving your financial ability will improve the likelihood of having your application approved.
Why Choose Loan Monster Home Loan Brokers in Perth?
The entire home loan process can be overwhelming, especially if you are new to the market. This is why you need a mortgage broker who can help assess your financial situation and detail all of the options that are available including the cost benefits of each.
Here at Loan Monster, we genuinely care about all of our clients and our mission is to make life easier for you. From evaluating your financing options to explaining technical home loan jargon, our qualified home loan brokers understand the Perth market and are here to help you every step of the way.
Fill out the enquiry form on this page and let our team help you find the ideal home loan for you. It takes less than a minute to fill out the form and a team member will get back to you within 24 hours, even on the weekends. Your dream home is closer than you think. Our online mortgage brokers are here to help you compare home loans in Perth, WA, and to find a loan that suits you and your family!