Home loans are no longer just about signing up for 25 years and making regular loan payments – nor even just about trying to pay off the mortgage as quickly as possible. Flexibility and peace of mind are just as important, and there’s a range of loan options that offer such benefits. However, these extras can cost money, and the key feature is still the interest rate. Here are the key features to look for:
Some loans – particularly those with a fixed interest rate – may limit the amount you can pay without getting charged a break fee.
With many loans, if you make extra payments you can get the money back later. This can have considerable tax advantages and provide useful security as you can store your savings in your mortgage. Some redraw facilities are much easier to access than others – check whether you’ll be required to apply in writing, how long it might take for approval to come through, and the costs involved.
According to Emilia Flores, the co-founder at UkBadCreditLoans, “some mortgages allow you to take a ‘repayment holiday’ for a short period such as six months, for example, if you’ve just had a baby. Check the conditions, as sometimes you can only make use of this feature if you’ve made extra repayments, or you may have to make higher repayments after the repayment holiday to make up for it.”
Paying interest only can be a useful feature for investors. It’s usually available for five years but some loans offer it for up to ten years. It’s risky, though, as generally you’d want to pay back the loan as quickly as possible to minimize interest charges and avoid owing more than the property is worth in case of a market downturn.
Mortgage offset accounts
You deposit money in an account and receive interest in the form of a reduction in the interest due on your loan. Because offset accounts don’t actually pay you any money, they don’t add to your taxable income – so, like redraw facilities, they offer tax advantages.
At Elite Tax Success, we can help you through this journey. Call 08 9370 5515 or send an email to email@example.com for enquiry.