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Legal Advice

Are the terms and conditions comprehensible?

Before you put your signature on the loan contract, you should satisfy yourself fully with the terms and conditions mentioned. Is the rate of interest fixed or floating? What are the additional charges or fees and the tenure of the loan? Is there a pre-payment fine or penalty? Is the interest rate mentioned in the loan at closing the same as the rate you were quoted? Will the loan be used to finance credit insurance? Seeking advice from Melbourne mortgage broker will sure help you more.

In a fixed home loan, the repayment amount is fixed irrespective of increase or decrease in the actual rate of interest. The disadvantage with this is you end up paying more if you fix a loan at a particular rate and then rates fall. But advantage is that if the rates increase, you still pay with old rates.

Choosing a Home Loan Service

Framing the same question in a different manner, would you be in a position to pay back the EMIs’ consistently over the entire term of the loan? To ensure whether you’d be able to or not able to, you should go over the terms and conditions in the loan agreement or contract very minutely, especially the fine print.

Most homebuyers do not go through the fine print carefully only to repent later. You should also assess in advance the EMI that you’d be able to pay after meeting all your monthly expenses.

A fixed home loan ensures that there is balance in your household budget as the repayments remain constant. You also have the option to withdraw from a fixed loan but you may have to pay penalty if the lender is incurring loss in his profits.

 

What is the minimum deposit that I will need to maintain?

Most home loans have a stipulation that require you to maintain a deposit of minimum of 5% (of the loan amount) in your savings account constantly over the term of the loan.

It might happen that in the near future that you lose your job or become infirm that renders you incapable of paying the EMIs. Credit insurance safeguards you from such eventualities. But whether you intend to go for credit insurance or not should entirely be your prerogative and cannot be made a condition for sanctioning home loans.

 

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