Tuesday, December 3, 2013

Choosing a home loan

Buying a home, whether it’s a condo or a house and lot, is a very important step in life. A home you can finally call your own, without worrying about monthly rent and renovating limitations, is the first step to becoming financially stable.

Applying for a home loan from a trusted bank will help you acquire your dream home without spending most of your life savings on it.

With the rise of local real estate and the market’s growing demand, many affordable choices are now available, but even with these options, it may still take years, even decades, to save up to buy a home.

Applying for a home loan from a trusted bank will help you acquire your dream home without spending most of your life savings on it. But before you commit to a deal and sign on that dotted line, know what to look out for when choosing a home loan.

First, check the bank handling your accounts. They may have special programs for long-standing clients. They may also be able to offer you a better rate. Even if your personal bank has offered a sweet deal, be sure to check out the competition too. Research and canvass other banks’ interest rates and payment structures.

If you get the right housing loan perfect for your needs and circumstances, you can enjoy your new home earlier on in life.

The most obvious consideration for a housing loan is the interest rate, but focusing on just this one thing is a common pitfall. Consider the entire package. A low interest rate doesn’t mean you’ll pay less overall.

Be wary of the terms of agreement, because interest rates, especially if they’re advertised, often have a promo period and are subject to re-pricing after that duration. Very low interest rates usually have annual re-pricing, which you might not be prepared for. Avoid this risk by opting for a loan with a fixed interest rate for a longer period of time.

The loan structure is another important factor in your decision. Committing to a housing loan is a huge step and will definitely affect your family finances. The loan structure should be in line with your financial situation. Consider your income and how much you can manage. The same goes for the initial deposit. Decide if you’re willing to dip into your savings and how much you’re willing to pay upfront.

There are definite perks to the buy-now pay-later scheme, especially when it comes to something as important as your home. If you get the right housing loan perfect for your needs and circumstances, you can enjoy your new home earlier on in life. - Aislinn Kee


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