Convenient Options for Home Loan Repayments in Australia

Are you a first-time homebuyer in Australia? Buying a home in Australia is also a dream of many expats and overseas investors who look for stability and strong returns. If you are an Australian citizen above eighteen, you can apply for the First Home Loan Deposit Scheme. This scheme allows many benefits to first-time home buyers. But many people face the issue of loan repayments once they own a home. Let us know more about home loan repayments in this post.

Purchase your First Home through the First Home Loan Deposit Scheme

If you plan to get into the property market of Australia sooner, you can try the First Home Loan Deposit Scheme (FHLDS). Began on 1 January 2020, FHLDS is an initiative of the Australian Government for supporting eligible first-time homebuyers to fulfill their dream of owning a home. They will get a limited guarantee from the government to build or buy their first home with a deposit of as little as 5%. Apart from that, buyers need not take out LMI under this scheme. You must be an Australian citizen of more than 18 years old to be eligible for this scheme.

The Burden of Home Loan Repayments

Many banks and financial companies in Australia are ready to grant home mortgage loans for people who desire to buy their dream home but lack the finances. Once the loan is approved, the dreaded part is its repayment. The reason is that you might land in a lot of trouble if you fail to repay it on time. Even it can lead to the loss of your dream home. So, you need to make the payment to the lender without any fail in order to repay your loan.

Different Home Loan Repayment Choices

If your home loan was approved recently and almost started your repayments, you might think of ways to pay off your mortgage repayments sooner rather than later. And its two biggest components are the principal component and the interest component. In Australia, you have the choice to apply for a home loan with interest-only repayments or repayments of both principal and interest. Depending on your financial situation, you can choose any repayment options.

Convenient Ways to Pay off your Repayments

Your home loan can be the biggest debt and burden you have in your life. Quick repay of this debt frees your money for many other things as it is a huge commitment. Some of the best ways to repay your home loan are:

  • Refinancing of Home Loan

    Refinance mortgage is an excellent option to save your money on a home loan and pay less interest. That means you can switch your home loan to a new one. Refinancing is also a good way to get a lower rate. This way, you can save thousands in paying interest. People refinance their home loan not only for repayments but also for borrowing more money or switching to a better loan type.

    You can lower your monthly home loan repayments by refinancing to a lower interest rate. In fact, a small decrease in the mortgage interest rates can add thousands of dollars based on the length of the loan. And you can save more money if you keep your repayments the same as before, even if you switch to a lower rate. Check mortgage refinance rates if you plan to switch to a new one.

    The idea of switching your home loan through refinancing can be a little hard. But it can provide you with many benefits. Here are some of the key benefits:

    • It could help you to get a lower interest rate
    • You can pay off your loan sooner
    • It can cut down your payments
    • You can get new loan features with refinancing
    • It also allows you to switch to a fixed or variable rate
    • It could consolidate your debts
  • Reverse Mortgage Loan

    You can borrow money to repay the loan by using your existing home equity as security. A reverse mortgage loan facility is available if you are sixty or above and own a home. It means you can take a mortgage loan by using your property as security. Many older homeowners in the country take this advantage to repay their home loans. They use their home equity in exchange for an ongoing payment, lump sum, or line of credit.

    But reverse mortgage can be a long-term financial commitment and risk involved in it. The decision on a home equity loan could affect your family and the people you live with. Many homeowners find equity as a valuable asset, but unlocking this facility without selling their property can be a risky task. Even if it is a good option to repay your existing loan, it is wise to get independent advice before deciding on a home equity loan.

    Making ongoing repayments is essential if you take a traditional home loan. But you can continue living in your home without making any repayments if you opt for a reverse mortgage. However, its outstanding balance will be due when the borrower passes away or the property is either vacated or sold. Usually, reverse mortgage interest rates are higher than home loan rates. Since there are no repayments, in this case, interest will compound at a rapid rate, especially if you opt for a lump sum loan.

Owning a home is a dream of everyone, but property prices are rising day by day. At the same time wages of people are stagnating. Repayments can be difficult for those who took mortgage loans to have large debts. But they can consider different options like reverse mortgage loans or refinance to pay off their home loan. Changing the repayment schedule can be a great way to pay off debts faster. Having a budget is certainly a great way to get organized before starting loan repayments. Try to make your long-term mortgage loan into a short-term repayment option through refinancing.