To fix or not to fix
One of the first considerations when looking at obtaining a real estate loan is whether to get a fixed or a variable rate. A fixed rate is when your interest rate remains the same for the entirety of your loan whereas a variable rate fluctuates, meaning you can potentially get higher or lower interest rates than originally planned.
In the current economy, fixed rates are looking to be the popular choice with the average variable rate of home loans over 3 years standing at 4.47% per year compared to the average fixed rate of 4.15%. Fixed rates are the safer option as it is easier to predict the amount you will have to pay and will not be affected by rate fluctuations; however, this also means you give up the chance to pay a lower rate on your loan. Alternatively, variable rates often make it easier to switch loans if you find a better rate and allow you to make additional repayments or withdraws which provides more flexibility for changes in your financial situation.
How much can you afford?
Working out a budget when buying a house is one of the most crucial tips to obtaining the perfect house and a large proportion of this budget depends on the amount you are able to borrow. To help determine the amount you are able to spend and the repayments that will be required, here are all of the calculators you will need to decide on a reasonable budget!
Determining the appropriate bank
There are many sites available to compare the interest rates of different banks; however, the rates are not the only crucial factor when deciding on a bank. Each bank has different amounts needed for a deposit, different fees and loan portability that all need to considered. You must also consider whether it is important that you are able to use offset accounts or if you would like to split the loan between fixed and variable rates as some banks do not offer these services.