Q: HOW CAN I OWN MY OWN HOME SOONER?
A: With a variable rate home loan, simply making your repayments fortnightly instead of monthly not only saves you money, but may also cut years off the term of your mortgage. With a fixed rate loan, during the fixed rate period repay the maximum extra amount permissible by the lender under the terms of your loan. You could also use a 100% offset account to help reduce the interest you pay.
Q: MAKING EXTRA PAYMENTS – CAN I DO IT?
A: Locking in a home loan and knowing that you can make those few helpful extra payments can take a stress off your shoulders. However, depending on which home loan you choose and with which lender, you can wind up paying penalties for making those extra repayments.
Generally, with a fixed rate home loan, during the fixed rate period you can repay an additional amount up to a specific value in extra repayments without extra costs. However this amount varies from bank to bank so check with your lender to see how extra repayments might affect you. However with variable rate loans most banks will allow you to make extra payments. Just look out for which bank charges you penalties and which doesn’t.
Q: EXIT PENALTIES – WHAT AM I UP FOR?
A: In general, buying a home is a satisfying experience until, that is, you get the urge to move on and realise the costs can be substantial. Exit fees were previously a major deterrent from switching home loans due to the costs involved if borrowers wanted to either sell and finalise the loan early or simply refinance to a cheaper loan.
The good news is that as of July 1st 2011 however, the Federal Government stepped in and decreed that lenders can no longer charge customers for repaying their home loan early.
Q: AHEAD IN PAYMENTS – CAN I STOP PAYING FOR A WHILE?
A: If you are ahead in your scheduled home loan repayments most lenders will allow you to apply for a home loan repayment holiday of between 2 – 12 months. However the loan has to note this feature and it must be cleared by the bank in question. You are able, however, to make payments during your stopped period if you wish. There are fees included with this feature so give the bank a call.
Q: HAVING DIFFICULTY MAKING REPAYMENTS?
A: Financial difficulty may mean different things to different people. Perhaps you have lost your job, have an illness, are behind in your loan/credit card repayments or think that you might be unable to make your repayments in the future due to some event.
If this happens to you, it is important to contact the lender as soon as possible. There are options available to customers whose circumstances temporarily prevent them from making their minimum repayments on their loans and credit cards. Solutions offered to you will differ depending on your circumstances.