If a home loan is too good to be true, odds are it is. Due to the lengthy time commitment of a home loan and the costly investment, what may seem like small oversights can add and cost you thousands. A guide to reading the fine print of your home loan is attached below.
Introductory rates
Low-interest rates on loans may not be for the entire borrowing period.
These types of rates offer a very competitive interest rate that many don’t realise is for a limited period, usually 12 months. The interest rate will rise to a lender’s standard variable rate, which may not be the most competitive rate you sought on the market. It is vital to know how long the introductory rate on your home loan is available for before signing the agreement.
Don’t forget about LMI
If you borrow over 80 percent of the value of your property, you are required to pay lender mortgage insurance. The higher percentage amount of the value of the property you borrow, the higher this fee will become.
Restrictions on additional payments
In some variable rate loans and fixed-rate loans, additional payments at any time or within the fixed rate period are not permitted. A cap may be placed on additional payments. You should check your terms and conditions to make sure that if you receive an inheritance, a bonus at work or win the lottery, you can pay your home loan down when the opportunity is presented to you.
