Most Beneficial Features of Owner-Occupier Home Loans
Few home buyers can afford the monetary investment required for their venture. This does not mean that home ownership is only for those with deep pockets. With the right mortgage, you can also become a homeowner. The first mistake most mortgage borrowers make is solely basing their choice on the interest rate a lender is advancing.
Mortgage rates in Guilford will no doubt give you a rough idea of how much you are expected to pay a lender and help you plan your finances. Even so, there are other things you need to know to make the right decision for a mortgage. If you are taking a mortgage for the purchase of your primary residence, for instance, you will apply for an owner-occupier mortgage. Fixed-rate, buy-down, adjustable-rate, veteran, and FHA mortgages are your typical loan choices. These come with several features that have different effects. The following are the most beneficial features you should consider for your home loan.
You might decide to make extra repayments on your mortgage to finish your payment faster or during a financial boom. With a redraw facility, your lender allows you to access these repayments. It is much like having a rainy day fund. If you, however, do not need the money, then it goes towards your mortgage repayment. This means that you stand to benefit either way from your savings. Lenders, however, have different terms on the redraw facility. Some, for instance, limit your annual withdrawal amount.
Most mortgage borrowers confuse an offset account for redraw facility. While both features allow you to access funds you make in loan repayments, the offset account enables the creation of a high-interest account linked to your mortgage. The amount saved in your account is accounted for in your home loan’s balance. As such, you only pay interest on the home loan’s balance not available in your offset account. Other than a lower interest rate, the account allows you unlimited access to its funds. Unlike the redraw facility, however, the offset account will not help settle your mortgage early.
Low Discharge Fees
At times, you might consider repaying the loan earlier than expected or switching to another lender. In this instance, your lender will charge discharge fees. These are also called exit fees and are meant to discourage you from leaving a lender or paying your mortgage too early and minimizing a lender’s profits. Negotiate for low discharge fees from your lender. In most cases, discharge fees are only applicable to fixed-rate loans.
This allows you to relocate to a new property with your current mortgage. The loan portability feature will thus mean considerable savings if you want to up or downsize in the future. It also negates the hassle of applying for another mortgage. With this option, you need not be stuck in a house that no longer meets your needs.
Think About Your Bottom Line
Several features exist for home loans. Some, however, are only bells and whistles that will not contribute much towards your bottom line. The above are some of the most beneficial ones you should negotiate from your lender.