Money money honey

Hopefully you would have already got a loan pre-approval from a bank before making an offer on a property.  I had previously had a mortgage with ING so I had gone to their website to see if they would be willing to give me money.  There are loads of mortgage calculators on the web to determine what you can afford to spend.


Once you know you can get the money to pay for a house you should go out and start to seriously look because once you find something you like you would really want to act straight away and make and offer and then sign a contract.


Now you have a signed contract then it's time to look at your mortgage options.  I use Mortgage Choice because I have used them before and like the options they can give me.  You could go directly to a bank but sometimes the mortgage broker can give you better packages that the bank doesn't give to the general public.  There is a lot of information on the Mortgage Choice website too.

I use the Home Loan Calculators all the time.  They came in very handy to try to work out our budget.  After going over and over the figures we worked out that we were going to split our loan into part variable rate and part fixed rate.  I had done some research and it looked like the prediction was that rates should stay around the same or continue to fall for the next 2 years.  So we thought we would fix a part of our loan for 2 years.  This would help us with our budget as we would know what the fixed loan repayments would be.  The other part we would keep variable so we could have the option of putting as much money on the loan to help pay it off quicker but be able to have a redraw facility to take the extra money back.


When the mortgage broker gets back to you he will give you a table with a number of different lenders and information about each bank's products.  I do not like paying any bank fees so asked the mortgage broker to include some of these as options for us.  In the end we decided that ING had the simplest loan products as there are no fees and I was comfortable using ING as my previous mortgage was with them.


We were quoted 6.62% for the variable loan and 5.99% for the 2 year fixed loan and we were happy with that.

The first problem we came across was we were unable to get a 90% loan (with a 10% deposit).  This was because the bank was unable to get mortgage insurance because Glen was still under probation on his job.  It meant we would need to obtain a 80% loan (with a 20% deposit).

Normally this would mean we would have a problem and may have needed to pull out of the contract because we couldn't get finance.  Luckily I had enough money from a previous sale that I could afford to hand over the 20% deposit.  So so lucky but it would mean we wouldn't have extra money to do those bigger things we had in mind i.e. build a deck on the back of the house or put in a new kitchen or bathroom straight away.  It did mean that our repayments were significantly less as our loan amount would be $276,000 instead of $310,500.

In the end we are paying an extra $100 a week on top of the rent we are currently paying.  The mortgage should be easy to manage then.  Mind you there are lots of extras that you need to pay when you own a property (rates, water, building insurance, maintenance).

It would be great to hear about how others decided on what mortgage to get.  I think it is a really daunting experience that a lot of people don't understand.  Banks have so many loan products and so many hidden fees that it all gets so confusing.