It is a dream of every family to establish a dwelling in their own house. However, inflation is increasing and causing a person’s purchasing power to decrease. To illustrate, the prices of materials for house construction back in the 90s became more expensive today.
In Australia, 3.3 million households out of 9.8 million Australian households have home loans. Out of these households, more than 1.8 million households are currently under mortgage stress. During these times, it is necessary to have something that helps you get through your home loan repayments, like Zanda Wealth Adelaide.
Home loans aid the financial need of a person for the construction of the dream home for the family.
What is a home loan?
A home loan or a housing loan is the money you borrow from financial institutions to buy a house. A home loan is a secured loan transaction where the property acts as the loan’s collateral. Most of the time, lenders cover up to 90 per cent of the cost of the home, wherein they offer economical interest rates to help the consumers.
Home loan vs. Mortgage
A home loan is often associated with a mortgage. Although used interchangeably, they have differences.
A mortgage is a loan used to buy a property. The property acts as the security of the loan. A mortgage can work for any other purpose -personal or business requirements.
Meanwhile, a home loan is a different type of loan. A home loan’s purpose is to construct a house or purchase a move-in house property.
What are the different types of a home loans?
There are different types of home loans that a consumer can enter. In Australia, the following types of home loans are common:
- Refinance home loan
- Owner-occupier home loan
- Investment home loan
- Guarantor home loan
- Low-doc home loan
- Construction loan
- Line of credit home loan
- Bridging loan
What is the home loan process?
The process of a home loan is necessary. The process sees to it that only qualified consumers can get a loan. Though quite lengthy, it is not too complicated to follow. Here are the following steps in processing your home loan:
- Gather necessary documents for the home loan.
- Compare different home loan providers and choose which best fits you.
- The lender will do a preliminary assessment.
- You will apply for your home loan to the lender.
- The lender will evaluate the property and then approve or rejects the loan application.
- The lender will send you an offer about your home loan.
- If you agree, then the disbursement of funds to you follows.
What are the necessary home loan requirements?
The process of a home loan is rigorous. Many borrowers think that it is too complicated and tiring to process. However, you can speed up the process by providing the following necessary home loan requirements:
- at least 5 per cent house deposit
- A stable source of income
- A good credit score history
- Bank statements
- Payslips
- No pre-existing debt
- Primary IDs like driver’s license, passports
- Council rates for the other properties in your name
- Other necessary documents like the First Home Owner Grant
Final Thoughts
Home loans can help you when you are short of budget for your home construction. Home loans are the fastest way to build your dream house. The process will not burden you too much with paying other expenses as you will have a timeline for repayment. However, before getting one, make sure you can pay interest on time to avoid future problems.