If you are located in New South Wales and you have decided to buy a home, it is very important to have the correct information on buying property. Purchasing real estate in New South Wales is a good, solid investment.
If you’re planning to purchase a home – either as an actual occupant or for investment purposes, you should know about the property options in NSW. There is a diverse array of residential options to choose from – apartments, houses, or new developments. Property buyers also have a range of options when it comes to location. The location can be anywhere from the harbour, by the sea, in the middle of the city, or in the country.
Purchasing a home doesn’t need to be a stressful experience if you took a lot of planning and research. Another thing to consider is your budget.
Home Loans in New South Wales
The most common duration of home loan payments is from 25 to 30 years. There are also a considerable number of mortgages that have provisions for early repayment. Most payments are on a monthly basis, and some are on a fortnightly basis. The average interest rate is from 6.5% to 7.5%.
Here are some basic information on home loans and mortgage choices in New South Wales:
Fixed Rate Mortgage
A fixed-rate mortgage has the same interest rate throughout the entirety of the loan. The borrower will be paying the same amount every month for the duration of the loan, no matter what changes happen in interest rates.
The major advantage of this type of loan is that budgeting will be easier for you because you will be paying the same amount every month and changes in interest rates won’t affect you.
Variable Rate Mortgage
A variable rate mortgage means that interest rates rise and fall with the market. In this type of loan, your mortgage rate varies or changes every single month. This makes it challenging to predict mortgage payments in advance.
There are some lenders who offer what is called a split interest rate. This is when your loan is split between fixed and variable rates. The percentage of each doesn’t have to be 50-50. The majority of the loan could have either a fixed interest rate or variable rate.
Introductory Rate or Honeymoon Loan
This is a kind of loan that is made available for first-time borrowers. It has a discounted interest rate for a certain amount of time, which is known as the honeymoon period. The introductory rates are typically a fixed discounted rate.
This is typically used for homes that will be built from the ground up. It allows you to call on your loan depending on the construction process. Building a new home starts from land purchase, then laying the ground work follows. The next step is the roof, and then constructing the walls, windows, and doors, and lastly, the finishing stage. For each step of the process, you are allowed to call on the type of loan you want to have. When construction is done, the loan will revert to a specific type of loan to be discussed between the lender and the borrower.
The interest rate is basically the rate that you will pay beyond your home loan. This serves as a fee to your lender for letting you borrow money. It is important for NSW residents to know what they will actually end up paying – the initial amount of the loan with the interest rate.
With many home loan deals available in New South Wales due to very low-interest rates, there is fierce competition among lenders to get more clients. The slew of home loan deals available today from lenders such as banks, credit unions, and building societies may be overwhelming. It is important to get the right home deal for you.