Decisions, decisions, decisions – 3 bond decisions dealt with in three steps
You're a first-time buyer and you need to find a way forward. But there are so many home loan options on offer that you're struggling to make sense of them, never mind choose one! We'll help you hunt down the offer that works best for you.
Actually, when you break it down, potential buyers need to make just three basic decisions before they apply for a home loan. And the first of these is what percentage of the purchase price you should save up for in order to put down as a deposit on your new home.
There's a huge advantage to putting down a sizeable deposit — it will dramatically improve your chance of getting your home loan approved. It also signals to sellers that you're serious about buying, and they may be willing to negotiate the purchase price with you as a result.
Paying a decent deposit will usually also speed up the processing of your home loan application. And if you apply through a reputable bond originator like BetterBond, it could even boost your chance of getting an interest rate reduction — which will lower your monthly repayments even further.
An interest rate concession — reduction! — usually depends on the size of the loan you apply for, the market value of the property, and your credit rating or risk profile. But you'll boost your chance of a concession even further if the loan-to-value ratio is less than 80%: in other words, if you pay a deposit that's at least 20% of the purchase price. And if you have a great credit record, you're in prime position.
The second decision you need to make is whether to apply for a variable or fixed interest rate. If you choose a variable rate, you run the risk of interest rates rising and pushing up your monthly repayments. But, while a fixed rate means your monthly bond repayments will stay the same for a while, you won't gain any benefit if the interest rate falls during that time.
Tough decision! But the banks that offer fixed-rate loans will usually only do so at interest rates well above the prime rate — and this will not only increase your minimum monthly payments, but also increase the total amount of interest you'll pay over the life of your bond.
And thirdly, you'll need to decide where to apply for your home loan. But that's an easy decision, thanks to bond originators like BetterBond. We offer homebuyers a free home loan pre-approval and application service.
So, you can skip all the stress that's associated with applying for a home loan. We'll guide you through the pre-approval process so that you meet all the banks' credit and affordability criteria. And we'll help you find out what you can afford so you don't waste time looking at homes beyond your budget.
Then, once you've made an offer to purchase (OTP), we not only prepare your application properly, we'll motivate that application to lenders to ensure that you get the best possible home loan deal. And we do it all for free.
Choosing BetterBond? Now that's an easy decision!