Home loans are the key to most property purchases and could be as important to you as the property itself. Buying your first home or investment property can be one of the most exhilarating (and stressful) times of your life.
There’s so much to consider, hours of property viewings and excited discussions about furnishing, renovating and moving in. And, for most people, one of the most vital yet time consuming parts of the process is figuring out which home loan to choose.
Stepping out to find your first loan can be daunting, so we thought we’d run you through a couple of key terms and background information. We hope this gives you a better understanding of what the world of home loans looks like so you can choose the best loan to suit your needs.
What are the common features across our home loans?
There are some terms that are the same across all our Qudos Bank home loans, so it’s important to let you know about how they work so you can easily compare.
- Interest Rate – this is the advertised rate of the loan and gives you an indication of what you’ll be paying in interest on your home loan. Some of our loans have variable rates, meaning they change over time, while others have fixed rates, meaning we set a particular rate for a specific length of time. Interest rates are quoted ‘per annum’, which means ‘each year’.
- Comparison Rate – this is the true rate of the loan. It takes into consideration the interest rate and all the associated fees and charges, combining them into a single percentage figure. It’s a great tool to help you compare loans, like for like, as some loans may have low interest rates and high fees while others have higher interest rates but no fees. Always check the comparison rate when comparing your home loan options.
- Principal – the principal of the loan is the actual amount you’re borrowing. For example, to purchase a $850,000 house, you may have a deposit of 20% which leaves a principal amount that needs to be borrowed of $680,000 (not including things like stamp duty, any consumer credit insurance or lenders’ mortgage insurance etc, which could push up the principal loan amount borrowed). Your interest will then be calculated on this principal amount. When planning your repayments, it’s best practice to try to repay your interest and principal together, rather than only paying the interest repayments.
- Establishment fee – to complete all the necessary paperwork to set up the loan, sometimes an establishment fee is charged.
- Account keeping fee and annual fee – some banks and lenders charge ongoing fees to maintain your account, send you balance updates and cover other administrative tasks. Here at Qudos Bank, we are proud to have $0 annual and account keeping fees on all our home loans.
It’s always important to talk to someone about your options to help you decide which is the right loan for you, so feel free to call us on 1300 747 747. To help you compare our loans, take a look at our Home Loan Brochure.
Loans are subject to approval. Normal lending criteria, terms and conditions, fees and charges apply and are available upon request. The information in this article is general and does not constitute as advice. It has been produced without taking into consideration your personal financial circumstances, objectives or needs. Before deciding to acquire any product, you should conduct your own investigation and analysis of any benefits or costs and seek your own independent legal and financial advice. You should also read our Financial Services Guide before applying for our financial products and services. Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557, AFSL/Australian Credit Licence 238 305.
Published September 2017