Home Loan Features You Need to Know Before Applying

As a plasterer, you know the importance of having the right tools for the job. The same principle applies when you're applying for a home loan - understanding the key features available can make all the difference to your financial situation.

Whether you're buying a home for the first time or looking to expand your property portfolio, knowing what features to look for in a home loan will help you make an informed decision that suits your unique circumstances as a tradie.

Understanding Interest Rates and How They Affect You

When you access Home Loan options from banks and lenders across Australia, you'll encounter two main types of interest rates:

Variable Interest Rate
With a variable home loan rate, your interest rate can go up or down based on market conditions and the lender's decisions. This means your repayments can change throughout the life of your loan. Many variable loans come with features like:

• Offset accounts
• Extra repayment options
• Redraw facilities

Fixed Interest Rate
A fixed interest rate home loan locks in your home loan interest rate for a set period, typically 1-5 years. This means you'll know exactly what your repayments will be during the fixed period, making it easier to budget for your plastering business expenses.

Many lenders also offer interest rate discounts, particularly for borrowers with strong financial situations or those who meet certain criteria.

Loan Amount and Borrowing Capacity Considerations

Your borrowing capacity depends on several factors that are particularly relevant to plasterers:

• Your income (including ABN income from your plastering work)
• Your existing debts and expenses
• The loan to value ratio (LVR) you're comfortable with
• Your employment history and financial stability

As a self-employed plasterer, lenders will typically want to see your banks statements and tax returns to verify your income. Having organised financial records will help streamline your Home Loan application process.

Lenders Mortgage Insurance (LMI) and How It Impacts Your Loan

If you're borrowing more than 80% of the property's value, you'll likely need to pay lenders mortgage insurance (LMI). This insurance protects the lender if you can't make your repayments, but it's an additional cost you need to factor in.

Some ways to avoid or reduce LMI include:

• Saving a larger deposit (20% or more)
• Using a family guarantee
• Looking into lender-specific programs for tradies

Key Home Loan Features That Benefit Tradies

Offset Account
An offset account is a transaction account linked to your home loan. The balance in this account is offset against your loan amount when calculating interest. For plasterers with irregular income patterns, this can be particularly valuable as you can deposit large payments when you complete big jobs.

Redraw Facility
This feature allows you to access any extra repayments you've made on your home loan. As a tradie, this flexibility can help during quieter periods or when you need funds for equipment upgrades.

Split Loans
Some borrowers choose to split their loan between fixed and variable portions, giving them the security of fixed repayments on part of their loan while maintaining flexibility on the remainder.

The Application Process and Getting Pre-Approved

Home Loan pre-approval gives you a clear understanding of your borrowing capacity before you start property shopping. For plasterers, getting pre-approved can be particularly valuable because:

• You'll know your budget when looking at properties
• You can move quickly when you find the right home
• Sellers take your offers more seriously

The streamlined application process typically involves:

1. Gathering your financial documents
2. Completing the Home Loan application
3. Property valuation (once you've found a home)
4. Final approval and settlement

Additional Costs to Consider

When calculating home loan repayments, don't forget about additional costs such as:

• Stamp duty (varies by state)
• Legal fees
• Building and pest inspections
• Ongoing costs like rates and insurance

Making the Most of Your Home Equity

As you pay down your home loan and your property increases in value, you build home equity. This equity can be valuable for plasterers looking to:

• Purchase investment properties
• Upgrade tools and equipment for your business
• Renovate your existing home

Understanding these mortgage features will help you make informed decisions about your Home Loan options. The property market can be complex, but with the right knowledge and support, you can find a loan that works for your situation as a plasterer.

Call one of our team or book an appointment at a time that works for you to discuss your specific circumstances and explore the Home Loan options available to you.