Buying Your Own Home
Whether you are buying your next property or are a first home buyer, conducting comprehensive research on new products in the market could save you money and reduce the life of your home loan. The constantly changing home loan market and changes in your personal circumstances mean that a home loan that was once the most suitable for you may no longer be in your best interest. Before making any major finance decisions, you need to develop an understanding of new products in the market; the following is a brief outline of the options you may consider when buying your next property.
Bridging Finance
Coordinating the sale of your current home with the purchase of a new property can be a colossal task. This situation can be aggravated if you are forced to sell your existing home at a low price because you are under considerable pressure to finance the new property. In such instances, a Bridging Home Loan is often used to cover the finance gap.
A Bridging Home Loan is a temporary loan providing financial cover which allows you to buy or build your new home before you sell your current home. This enables you to buy the property you want, without being held back by any lengthy sales processes.
Equity Finance Mortgages (EFM)
An Equity Finance Mortgage (EFM) allows you to borrow up to 20% of a property’s value and works in conjunction with a traditional home loan. Under the EFM, you are not required to make any regular monthly interest repayments throughout the loan, which you can hold for 25 years. When you sell the property or repay the EFM, you repay the EFM amount you originally borrowed plus up to 40% share of any increase in the value of the property. Should the value of your home decrease when you have to sell, you may not need to repay the full EFM amount – a feature unique to EFM. The EFM lender will share up to 20% of the realised loss on your property. This share of the losses will depend on how much you originally borrowed and how much the property decreased in value.
An EFM allows you to:
- Reduce the upfront and ongoing costs of purchasing a new property;
- Reduce your current monthly mortgage repayments (via a refinancing of your existing loan); and
- Buy a more expensive property than you may otherwise be able to afford.
More Information From an EFM Accredited Broker
If you would like to talk confidentially with an accredited EFM broker about your EFM options or to find out which home loan options are in your best interest, call us on 13 LOAN (or +61 2 9249 3739 for international callers) or email us the form on this page and we will return your contact within 2 business hours.
More information and home loan help
For more information on how and where to find a better home loan deal from an extensive panel of Australian banks and secure mortgage lenders, or to speak to your local area mortgage expert, contact us on 13 LOAN (direct +61 2 9249 3739)
