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It’s the desire of most young couples starting their life together to buy a dream home. However, Joe Tirimacco from SA Loan Options says, “There is a big difference between how much you can BORROW and how much you can AFFORD.”
“A bank may agree to a loan maximum,” says Joe, “but that doesn’t mean the repayments are necessarily what a purchaser can afford. Many young couples now have a minimum deposit and will borrow the maximum the bank will allow. But they misjudge other on-going costs such as insurance, rates, utility bills, home repairs, living expenses and fluctuations in the finance sector.”
Joe has a great suggestion for anyone wanting to enter the property market for the first time.
“Calculate what you currently pay in rent – say, $350 per week – and what it will cost you to service a mortgage – say, $500 per week. Every week, put aside that extra $150 into an account and leave it there. If you can easily afford to put aside $150 per week – or whatever is the difference between your rent and your possible mortgage payments – for 12 months, then you are ready to take on a mortgage; plus you’ll have saved a nice nest egg.”
Being under-prepared and over-financed are the biggest risks for anyone buying a property, says Joe.
As a Mortgage Broker, Joe is qualified and licensed to provide information relevant to buying property and has access to many more options than one bank. A Mortgage Broker can save you time, help you avoid hazards, provide you with greater choices, and help you find the most suitable loan for your circumstances.
He says most banks will answer your questions and tell you what THEY can do for you. But that differs from bank to bank. For example, offset accounts. Most banks won’t voluntarily recommend an offset account when you take out a mortgage yet this option could save you tens of thousands of dollars.
“An offset account takes into consideration your mortgage interest rate against your savings, or any money in your other accounts,” explains Joe. “Because interest is calculated daily, an offset account is a great way to take advantage of your savings. Putting money in an interest paying account will mean that you will receive a very small Interest benefit from your savings, which is then taxable. However, if this same money is used to offset your mortgage, you will save Interest at the same rate as your mortgage and this is always higher than the Interest you will receive on a savings account.
What is an Offset Account?
An offset account is a transaction account that is linked to your home or investment loan. The credit balance of your transaction account is offset daily against your outstanding loan balance, reducing the interest payable on that loan.
Offset accounts let you make the most of your income and other money to reduce the interest payable on your home loan, thereby reducing your loan term.
Whether you are buying, selling or refinancing a home, the difference from one lender to the next can be significant. Some lenders have lower rates, some have a better offset option, others will lend you more, and some have more flexible payment options. Joe Tirimacco will assist you in choosing a home loan and structure appropriate to your personal situation and that saves you money.
There are many ways you can budget for a home deposit or finance your mortgage so for more information please contact Joe Tirimacco on 0414 555 792 or visit http://www.saloanoptions.com