Its My Home : Its my home 2018
16 IT’S MY HOME IT’S MY HOME 17 Some loans offer the ability to make repayments above the minimum repayment amount, so you can repay the loan faster and reduce the amount of interest you are charged. Generally, home loan repayments will consist of principal and interest components, gradually reducing the amount owing on your loan. With interest-only loans, only the interest is paid each month, leaving the original principal outstanding at the end of the loan term. This means that at the end of say 10 years, you will still owe what you started with. This can be beneficial to property investors taking advantage of negative gearing tax benefits. PRINCIPAL AND INTEREST BENEFITS n You will pay less interest over time and you will pay off your loan in full by the end of your loan term. THINGS TO CONSIDER n Your repayment amount will be higher as the principal is being repaid as well as interest. INTEREST-ONLY BENEFITS n Your repayment amount will be lower during the interest- only period as no principal amount is being repaid. THINGS TO CONSIDER n At the end of the interest-only period, your repayments will increase and be higher to repay the principal over the remaining, shorter term. ADDITIONAL REPAYMENTS INTEREST-ONLY VS PRINCIPAL AND INTEREST IT’S A GOOD IDEA TO DISCUSS YOUR PERSONAL CIRCUMSTANCES WITH YOUR LENDER, BROKER OR FINANCIAL ADVISER This is an optional feature on certain home loans that allows access to any additional repayments made on your home loan. If you redraw funds from your home loan, your outstanding balance will increase. Some lenders have a minimum redraw amount and may also charge a fee per redraw. REDRAW FACILITY This feature allows you to transfer your home loan to another property if you move. This can save you money on application fees and mortgage stamp duty down the track. A mortgage offset account is a bank account that is linked to your home loan. No interest is paid on the savings in the offset account. Instead the savings in your bank account reduce the balance of your loan on which interest is calculated. BENEFITS n Your home loan interest is charged only on the net balance, reducing the amount of interest you will be charged which means you can pay your loan off sooner. THINGS TO CONSIDER n Higher monthly fees may apply to have this feature n No credit interest is earned on the balance in the linked account. Refers to the regularity of loan repayments over a period of time which you must make as indicated in your loan agreement. Repayment frequencies are generally weekly, fortnightly or monthly. It is good to have this flexibility so you can align your repayments to your pay cycle. Some lenders allow you to increase your loan down the track, using the equity in your home, to complete home renovations, make an investment etc. Fees and charges may apply. OFFSET ACCOUNT REPAYMENT HOLIDAY REPAYMENT FREQUENCY TOP UP This feature offers the ability to take a break from your loan repayments. Typically, you can reduce or avoid making your repayments for up to six months, during which time the interest is normally added to your loan. Lenders will typically allow repayment holidays when you are changing jobs or are on maternity leave. LOAN PORTABILITY Pictures:iStockbyGettyImages.
Its My Home 2018 May