Non-Conforming Loans

Add up those home loan fees

The Daily Telegraph, 12/03/2002, page 32.

Once you've saved up the deposit for a home, don't forget to take into account all the extra fees that come with buying a house - some or all of these: stamp duty, legal costs, disbursements, mortgage insurance, pest inspection report, survey report, builder's report, strata inspection report, loan application fee, valuation fee, registration fee, sundry fees like refinancing or switching fees.

On a mortgage loan of $300,000, expect to pay at least $15,000 in fees. With mortgage insurance, this will rise to about $17,470.

Choosing the right home loan

The Daily Telegraph, 12/03/2002, page 32.

There are no right or wrong answers when it comes to choosing a home loan - it just has to be right for you. But you must know what all the options are before making a decision. A basic fact to keep in mind is that the more flexible the loan, the higher interest you'll pay. A variable loan which allows you to draw against repayments or offset savings against the mortgage will have a higher rate than a basic loan.

Always compare loans with the same features when looking for the best interest rate. Shop around. And if you're earning more than about $50,000 a year, or $80,000 with a partner, ask about professional loan packages. A professional loan interest rate is usually half a per cent lower than the standard.

Keep accurate records

Keep accurate records of your deposits and ATM transactions. It is also wise to keep copies of your loan application and approval documents in a safe place.

This is the best way to avoid hefty fees which may be charged by a bank when its customers want to see copies of their cheques or loan files.

Rebuild your creditworthiness

You may baulk at having to pay higher interest rates or comply with stricter terms on the non-standard loan alternatives.

However, paying off such a loan is one of the best ways to establish or rebuild your creditworthiness in the eyes of mainstream lenders. Many borrowers have used this source of finance as a way back to ordinary borrowing.

Rewards for prompt repayments

Check to see if the lender offers discounts on the interest rate if you build up a record of on-time payments.

This is one way to cut the cost of this high-rate form of finance as you go.