Applying for a home loan online provides a convenient way to compare your options. You can view different interest rates and other details before seeking approval. However, before sending in your application, there are several important things to consider.
Choose a Reliable Lender for Your Home Loan
The first tip for ensuring that you make the right decision with your home loan is to find a reliable lender. You should choose a lender that can be trusted, and that has an established history in Australia. Lendi have detailed insights to Westpac which may suit your needs.
If you want a name that you can trust, you should shop for home loans from Westpac Bank. Westpac was founded in 1817, making it the oldest bank in Australia. It currently has over 5000 branches and ATMs throughout the country.
When you are ready to compare loan options, start with the options available from Westpac Bank.
The following tips will help ensure that you are on the right track to getting approved for your home loan.
A High Loan Valuation Ratio May Eliminate LMI
One of the first considerations, when you are applying for a home loan, is the amount of money that you have available for a down payment. This deposit can help reduce the total amount of the loan, your interest rates, and your monthly repayments.
Depending on the size of the deposit, you may also avoid the need to pay lenders mortgage insurance. Most lenders require borrowers to pay this fee if the loan valuation ratio is higher than 80%. The LVR is determined based on the amount of the loan compared to the value of the property.
For example, if you are borrowing $130,000 for a home that is valued at $150,000, the LVR is 80%. In this situation, you would likely avoid the need to pay LMI. However, if your deposit were just a few hundred dollars less, you may end up paying the insurance.
Fixed Interest Rates are Not Always Fixed for Life
Variable interest rates remain the most popular option for Australian home buyers. However, a fixed interest rate allows you to stick with the same interest rate for a set period.
Many people who choose fixed interest rates do not realise that the interest rate is not always set for the entire life of the loan. Lenders often provide a fixed term length of one to seven years. After the fixed term length expires, the interest rate will likely rise.
Determine How Much You Can Afford Each Month
Most lenders will turn down an application if they believe that you cannot afford to make the repayments. Before going through the hassle of having your application denied, you should consider your income.
The typical recommendation is to avoid monthly repayments that exceed more than 28% of your gross income. If you make $3,000 per month, your monthly repayments should not exceed $840.
After determining how much you can afford each month, you can use a home loan calculator to estimate your monthly repayments. You can use these calculators to gain a better idea of the price range for homes that you can afford.