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Mortgage Basics

What You Need to Know About Owner-Occupied Home Loans

Home Loans

We have seen the signs, and everyone is bracing themselves for a recession (or perhaps stagflation). However, some experts are encouraging the public to invest. So, should you?

Mortals, like us, might be wary of purchasing stocks. In that case, why not invest in real estate? Experts are pointing out we are currently enjoying a buyer’s market, which means that you buy properties at lower prices.

If that does not inspire you to buy a property in Australia, you should know that some experts are saying that the economy will recover next year. It might mean that you can resell your house at a profit. Even if you plan to live in the said house, purchasing it now means that you save money.

If you are a first home buyer, kindly keep your eyes glued to the screen. This blog talks about owner-occupied home loans. This financing option might help you with your first real estate investment.

What Are Owner-Occupied Home Loans?

As its name suggests, this loan can be used to finance your home purchase. Owner-occupied home loans differ from other financing options, such as investment property loans, because you are the end-user. You are not going to rent or resell the house. Instead, you are going to live in the house.

The loan is an excellent financing option if you are a first home buyer. You can enjoy your home while paying the loan in installments.

If you avail of this loan, your contract might stipulate that you cannot rent the said property. You might have to live in the house for a specified period. If you breach this agreement, the bank might demand that you pay the loan’s outstanding balance.

Why Does This Matter?

It is important to note that owner-occupied home loans are different from investment property loans. Owner-occupied home loans usually have flexible terms compared to traditional ones. You can adjust the loan’s interest rate and even the loan period. You might have to pay additional fees to avail of these terms, though.

It is also worth noting that the interest rate of owner-occupied home loans is high when compared to the rates of other loans, such as personal and car loans. The bank is more willing to lend you money if you purchase a property you plan to live in. Thus, it is riskier.

The bank will also consider your income and check if you can pay the said amount. Banks will look at your income, employment status, and credit score. Thus, they are more willing to lend you money if you have stable employment.

Owner-Occupied Home Loan Fees

There are other fees associated with owner-occupied home loans. Here are some of them:

  • Upfront fees
  • Ongoing fees
  • Exit/break fees

Conclusion

The economy is looking gloomy, but you have an alternative. Purchase a property now and live in it. If you are a first home buyer, try your luck with an owner-occupied home loan. 

You might be able to enjoy making monthly payments with no rental fees. If you move now, you can buy a property in Australia for a lower price. You might even resell the property next year when the economy recovers.

As a first-home buyer in Australia, you will be in better shape if you apply for an owner-occupied home loan from Shore Financial. We will make your dream home into reality, so contact us now for more details!

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