Buying a home

Buying a home. Home loan options

Your home loan will most likely be the largest debt you ever take on, which means you need a strategy to manage it. Here are a couple of free tips when it comes to purchasing and paying off your home.

Should you use a mortgage broker?

A mortgage broker is a professional who will liaise with banks and other lenders or financial institutions to organise your home loan. They will have access to a range of loans and financial products and will save you the time of going to a handful of lenders yourself.

A mortgage broker can help you by taking all of the time-consuming leg work that goes into securing a home loan. As experts in home loan products, they also have a thorough understanding of the different fees associated with a mortgage and they can find a loan even if your current lender is no longer suitable for your needs.

Whether you’re a first-home buyer, looking to refinance, or building an investment portfolio, a mortgage broker can help you get access to the best home loan for your goals. Make sure you speak to a qualified financial professional before you make any big decisions to ensure the transaction is structured effectively for you.

Should you pay your mortgage off early?

Not so long ago one of the most effective, low-risk wealth creation strategies was to use spare savings to pay down a mortgage, either directly or via the well-disciplined use of an offset account. But what about now? With home loans being offered at interest rates of less than 4% pa, does using surplus savings to pay off the mortgage still make sense, or is it better to contribute those savings to an investment that may provide higher returns?

If you have higher-interest debt, like a credit card, it should be cleared as soon as possible. The rules of managing high-interest debt are simple: pay off the debt with the highest interest rate first, and work down to the lowest interest rate debt. If possible, consolidate all debt at the lowest interest rate.

Whether paying off your mortgage as quickly as possible is the best option really depends on your situation. And it doesn’t need to be all or nothing. A blend of paying down debt and investing may provide a happy medium.

Got some spare savings capacity? As a financial planner I can help you work out a wealth creation strategy that’s right for you. Give us a call for a free chat.

Financial Planning Qld PTY LTD (ACN 646 136 030), trading as Financial Planning Qld is a corporate authorised representative No. 1289377 of Insight Investment Services Pty Ltd, Australian Financial Services License No. 309996

This website contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

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