Thinking of getting into the property market Down Under, or looking to take advantage of the equity in a house you already own? Before you begin to look at houses or land to purchase, it helps to know the types of home loans and mortgages available in Australia so you can select the product that best suits your purposes. Below, we profile three products that may be right for you..
In recent years, home prices have soared, making the market a scary place for those looking to purchase their first property. To stimulate demand and give millennials a hand at getting into the real estate market in Australia, a product known as the honeymoon loan has been offered in recent years by retail mortgage brokers, with the banks quickly following suit in response to demand.
This type of mortgage extend first time home buyers a discounted interest rate for the first 6-12 months, though terms of up to four years have been found on the market. The catch of this sweet deal is that the interest rate reverts to the normal rate after the introductory period is up, so be sure you can afford the house you are pursuing at the normal rate before buying.
Also, be sure to not design your life around your lower rate – take advantage of the low rate in the first year and sock away money for an emergency fund instead.
Reverse mortgages
Already own a home, but looking to make some badly needed renovations (like a professionally designed deck for the backyard)? You can take advantage of the equity that has built up in it over the past couple of decades by taking out a reverse mortgage on your property.
This will provide you with a reservoir of capital that will remit either a fixed amount of cash per month to your bank account (good for retirees), or a lump sum (great for expensive reno projects like the one previously mentioned).
Just be aware that your beneficiaries of your estate will be responsible for any outstanding debt on the occasion of your passing, so keep this in mind before signing any documents.
Construction loans
Building a home from the ground up? Traditional mortgages will not work well for you, as there are a number of financial realities that make a normal loan too burdensome during the construction process.
As such, construction loans are a better choice for those building their own Camelot, as these financial products only provide the loan amount necessary of the purchase of land and the construction process, rather than the anticipated value of the house upon completion.
This will fund your project without placing undue financial pressure on you before it is justified.
For these and other outstanding products that will help meet your real estate needs in Australia’s housing market, check out some of the award winning mortgages by Newcastle Permanent, which is one of the nation’s most trusted loan providers.