Basic Terms You Need to Know If You are New to Property Game

If you are planning to avail a loan for your dream house, you might get confused by the number of technical terms that many financial institutions or the banks will use as these may sound new to you. It’s time to acknowledge some of the home loans terminology as it will ease out the process of availing home loans in Australia.

Have a quick glance at the list of the technical terms used by the banks while availing a home loan.

Resale

When you buy a home from someone who is the owner and is now selling it, then term resale is used. This indicates that you are not actually buying a brand new home directly from the builder.

Margin

If you are borrowing a loan, you will find that the bank will not lend you the whole amount. It will rather offer you 80-90% of the amount of the cost of home and you will have to pay the balance 20-10 %. Thus, the amount that you will have to pay from your pocket is called margin.

Full disbursement

When you pay the entire cost in one go, the company will hand over the entire payment to the seller. The cheque will be disbursed only when you have submitted all the necessary documents and have made the down payment. In case you are purchasing an apartment from a builder that is under construction, the company will not release the whole payment in one go. Thus, the money will be released only in stages. This is considered as partial disbursement.

Offer letter

Once your loan is sanctioned, you will be provided with an offer letter that will include a number of details -

· Rate of interest

· Fixed rate of interest

· Loan amount

· Tenure of the loan

Post-dated cheques

These types of cheques are dated ahead of time and cannot be processed until date. These cheques are generally addressed to the home loan company and are signed by you.

Thus, knowing these terminologies will help to get you off to a fly.

Top Tips to Pay Off your Home Loan Speedily

It is worth taking a home loan, for moving into your dream home. However, paying off home loan for good 20-25 years is daunting task and paying it off as soon as possible requires planning and detailed understanding of the complete loan process. Here are some tips that can help you.

Pay it off quickly - The basic rule with loan, be it home loan or any other loan is, and pay it off as quickly as possible. The longer you take to pay off your loan, more is the amount you are going to pay. For instance- if your loan amount is $600,000 at 5.46% percent for 25 years, then your monthly repayment will be about $3,670. If you pay the loan back in 10 years rather than 25 years then your monthly payment will increase but you will be saving a lot of amount in totality as in this case your rate of interest will be low.

Consolidate your debts - If you are paying other personal debts too like credit cards, store cards, personal loans etc.) Then you must be paying between 15-25% interests on these personal debts. Instead of paying a high interest rate, you can refinance all your debts into your home loan. This means by consolidating other debts into your home loan, you need to pay only 5-6% interest. With this strategy, you can save a whopping amount while saving yourself from higher personal interest rates and unaffordable debt.

Use your offset account to your advantage - You can use your offset account to your advantage, instead of keeping all your spare cash into an interest bearing account where you will earn a little amount of interest, and in turn will be paying tax on the amount you earn, transferring the extra cash into your offset account will work in your advantage. Making use of this additional cash to offset the interest you are paying on your home loan will be the best possible option.

Split Loan - Split loans in another great option, giving the borrower immense flexibility and advantage. In split loans, you can fix part of your home loan and set the remaining balance of the loan with the variable rate of interest. In case, interest rates go down in the coming months, then you stand to gain from it, this gives borrower enough flexibility, as you know some part of your loan is safely fixed and other is variable.

Taxation Revenue from Property, Continues to Rise

According to the recent data revealed by the Australian Bureau of Statistics (ABS), 46.4% of state and local government taxation revenue in the financial year 2012-2013 generated from property related taxes. Over the whole year, state and local government collected a sum of $35.931 billion as a property tax. This collection creates a new record in Australian property market. It clearly shows that property taxes are the largest source of revenue for local and state government.

The overall value of property related taxes is increased by 7.2% during the recent financial year. With home values beginning to rise nationwide from June 2012, it was already clear that state and local government would make the most of it. With higher home values, taxes such as taxes on land, municipal rates and stamp duty also increases. Here is the list of property related tax revenue that is collected under different categories during 2012-2013:

Category	Amount Collected	Percentage
Stamp duties on conveyances	$12,841 m	36% of the total revenue
Land Taxes	$6,192 m	17% of the total revenue
Municipal Rates	$14,192 m	40% of the total revenue
Government borrowing guarantee Levies	$1,063 m	3% of the total revenue
Other	$1,360 m	4% of the total revenue

(Source: RP Data, ABS)

Property related taxes are collected from those who own a property in order construct a home or for investment purpose. These taxes are typically payable by the owner of the property. It is obvious that every property is owned by someone, whether the person is an owner-occupier or an investor. However, those who choose to rent a property rather to own a property do not need to pay tax on the property. State and local government have experienced a significant boost due to continuous improvement in the residential housing market over the year, which is expected to continue with the same pace in the coming months.

Get The Most Affordable Home Loan Offers In Australia

There are a number of options available in the financial markets of Australia like car loans, home loans, personal loans, etc. However, home financing is the most popular amongst people willing to own a dwelling in Australia. If you are interested in buying a house, you must do all the spadework related to the rules and regulations related beforehand.

The immigrants in this nation would have the most memorable experience of moving for permanent residency, due to better job opportunities and hospitable culture. Ideally, they seek help of a reputed broker who helps them to get a loan as well as helps to select the right property as per their needs.

To support affordable lending and convenient repayment, assess your needs and total payments towards the home finance by using tools like home loans calculator in Australia that will help to visualize your affordability. This calculator is the most transparent device available on the internet to help potential buyers follow up through all the relevant study and research before planning to own a property for living with family.

There are a number of reputed lenders, financing institutions, banks, credit unions and more that offers money-saving home loans in Australia in the most competitive interest rates. They offer the most suitable type of borrowing options amongst fixed and variable rates of interest.

“When I bought a house in Australia, I was seeking a multi-resident house, whereas; I ended up taking an apartment because I realized that for a single occupancy, the apartment is extremely viable option. Loans Direct, a renowned 15 year old financial group helped me with all the processing and funding by getting a quick approval from the bank”, - as shared by Erika.

Introduction To Types Of Home Loans

We all long for a home of our choice where we wish to spend our life with our dear ones because home is a place where our heart lies. With the immense inflation in the real estate industry, few of us feel that the dream of buying or constructing a house will remain  a dream. While buying or constructing a house, the most essential elements lie in generating the funds, this is where Home finance comes into the picture. Moreover, a home loan calculator provides general comparison of loan offers from various financial institutions and the rate of interest each of them provides, along with the repayment calculations

Loans are the monetary aid; however,  there are different interest rate being approved. Therefore, before concentrating on the rate of interest, it is important to understand what kind financing option is suitable and how many types of credits are available in the market.

There are three types of home loans available:

VARIABLE INTEREST HOME LOANS: The best form of finance for the initial investors in a home as the interest rate fluctuates. Sometimes the interest rate falls; this grants a benefit in lowering the amount of the installments. However, it is also noted that the variable loans become disadvantageous if the rate of interest increases due to its variable nature.

FIXED INTEREST RATE HOME LOANS: Just as the name suggests, it has a fixed rate of interest generally for a period of 1 to 10 years  which after the term ends, the borrower can change the format of rate of interest to variable. The benefit lies when there is an increase in the rate of interest that does not affect the borrower’s financial stability.

LINE OF CREDIT LOANS: It functions like a credit card and works on the fact of how much you  owe and how much the property is worth of. However, the biggest disadvantage is that we often end up spending more than we are able t o pay.

Thus, while applying for a home loan product , it is very essential to compare home loan rates as it gives us a fair idea of the interest rates that are available in the market.