4 Aspects to Consider While Choosing a Mortgage

When you buy a home, you also enter into a long-runningfinancial obligation-your mortgage. As it may run for anything between 10- 30 or more years, it will have a long-lasting impact on your finances; thus the need to choose it wisely. Here are some tips forto follow during home loan comparison to select a mortgage that offers the best terms.

  1. Find Something You Can Afford

When conducting a homeloan comparison, a mortgage calculator is a great tool to decide how much you can spend. The factors to consider are your annual income (including the income of apartnerin your mortgage if any), your monthly expenditure on bills to be paid andyour annual savings plan.

You need to consider mortgage costs like insurance and closing fees. The rule of thumb is to restrict expenditure on your home to a maximum of three times your salary.When you are buying a mortgage, this will mostly be the highest amount you will qualify for.

  1. Your Credit Standing

While opting for a mortgage, you need to take care of your credit score. It is an important factor in determining your mortgage worthiness and the interest rate you pay. The higher your credit score, the better will be the interest rate. If your credit score falls short of the ideal, you can improve it by avoiding any expensive purchases and paying your credit card dues.

  1. Conventional Mortgage Vs.Government- Backed Mortgage

When you are on a home loan comparison site,you will find that there are two main types of mortgages. A conventional mortgage is guaranteed by abank or a private lender. The latter is a good option when you have a good credit score and good income but lack the cash savings for a large down payment. If you can afford a large down payment, you may want to consider a conventional mortgage like a Keystart loan if you live in Western Australia.

  1. Which Interest Rate To Select- Fixed Or Variable?

Interest rate options need to be chosen carefully. Many home buyers prefer a fixed –rate loan because it carries a fixed rate during the tenure of the loan and themortgage payment remains unchanged. Variable or adjustable rate mortgages have fluctuating interest rates or interest rates that are reset at specific times and this results in changes in the mortgage payments.

The mortgage selection involves some home loan comparison or meeting different lenders as the terms and conditions differ. If you want to know more, don’t hesitate to contact us at Home Loan Comparisonon 0419 856 669.