An Ideal Checklist Questions to Prepare Yourself When Getting a Home Loan

From the time we start earning, many of us work towards saving enough money to buy a home for ourselves. True, our parents may already have a home but still we feel the need to buy a home for ourselves, to have our own space. However, with rising cost of living, just surviving month to month can be a tough task in itself. This is where a home loan comes in extremely handy. Here are few checklist questions for Home Loan.

Home loan can be a daunting prospect, especially considering the length of time involved. However, just by keeping a few key points in mind, we can make sure that we get the best home loan deal possible.
 
When you are looking for a home loan, don't get mixed up with all the "jargons" used in the finance industry. Let us prepare your checklist for your home loan. The first set of it consists of questions that you must ask your Bank Correspondent. This checklist is useful when you are looking forward to:

• Buy your first home
• Refinance your existing mortgage
• Debt Consolidation
• Renovate or Upgrade your home, or
• Invest in another property

Here is the list of questions:

1. For what purposes you are providing credit?
   The purpose usually consists of:
• Purchasing a home to live in
• Investing in another property
• Renovating your home
• Consolidating your debts, or
• Refinancing your existing mortgage or any other needs
2. What kind of loan repayment type are you providing?
   He might provide you with loan repayment options, such as:
   • Interest only Repayments - You will only repay the interest on your home loan, and your loan balance will not reduce
   • Principal and Interest - You will have to repay the interest and principal amount together. It means your loan balance will gradually reduce.
3. What kind of interest I am supposed to consider?
   He will ask you to consider the interest rate type in terms of:
   • A Fixed Rate Home Loan - With this type of home loan, your interest rate is set for a fixed period, and your repayments remain the same for the duration of the fixed period, usually between one and five years, or
   • A Variable Interest Rate Home Loan - This type of home loan is very popular with first-home buyers who just want a loan product that is simple, easy to manage and offers a number of features and benefits.
4. I am concerned with interest rate movements (i.e. up or down), what are my options?
   If you are concerned with the interest rates moving upwards, he would ask you to consider a Combination (Split) interest rate loan because it will allow a mixture of security and flexibility. This is how you will pay:
• A fixed interest rate payment for an agreed portion of your home loan, and
• A variable interest rate payment on the remaining portion of the home loan.
5. What kind of Features and Benefits Should I Considering with Home Loan?
   He would make sure you understand all the features and benefits available to you, such as:
• Taking advantage to make "extra repayments" each month. So, you can pay off your loan faster.
• Taking advantage of "redraw facilities", so you can withdraw any extra payments you have made on top of your normal repayment amounts, if you need the cash.
6. How long should I expect to remain in the credit contract (i.e. loan term)?
   Generally the Home Loan comes in
• Long-term - Over Ten years
• Medium-term - 5 to 10 years, or
• Short-term - Less than Five years
7. What will be my Exit Strategy?
   Any exit strategy is a plan for what will happen with your loan when you retire. The lender/credit provider will need to see that you will be able to afford the repayments without having to sell your property (i.e. selling your house is not seen as being a valid exit strategy).

So, now you have a checklist of questions to help you get organized when getting a home loan or an investment loan. And, you should now be better prepared to make a decision that suits your personal needs and budget.