Here are some tips and strategies for planning a property for the new fiscal year. Read on to learn more about property investments, home buying, interest rates and how you can save from your home loan.
1. Cash Out – Cash In
There are actually a lot of methods in saving a greater amount of money while achieving your goals. Savings can come from your income bonus, income tax returns, selling high prices assets, and preventing from buying luxurious materials which are not very necessary. Put the earned money in your savings account and you will be surprised to great savings after buying an investment property.
2. Advanced Interest
A lot of investors have maintained desirable savings and good cash flow because they considered the tax benefits of advance interest rates from home loan. Advanced home loan interests will allow borrowers to pay the interest rates earlier; they can pay up to 12-months worth of interest and would let them take the tax deduction in the present financial year.
However, there are some limitations to remember:
- Once the term of the advance interest has ended the home loan might need to be switched or renegotiated to some other loan type and most of the time it will require the borrower’s expense.
- It involves fixed loan rates; usually these rates are not very flexible compared to variable loan rates.
3. Tempting Fixed Re-payments
There are loan providers who give out lower fixed interest rates. A recent survey showed that three percent of new home loan borrowers preferred to have a fixed interest rate for a home loan. Most borrowers can opt for this interest rate because it is more stable. But there are a few features being offered that will cost you some expenses like the switching or breaking a home loan.
In terms of interest rates, variable rate mortgages are more flexible but borrowers must always be prepared for interest rate increases. For borrowers who would like to take advantage of the various interest rates, they can split the home loan between variable and fixed rate.
4. Thinking Out of the Cheapest Interest Rate
Selecting a home loan with a very low interest rate is not always the best choice. You need to consider your current situation and any other changes that might happen in the future. For instance, if you are planning to make a property renovation in the future and the interest rates were raised by the RBA and you badly need some finances for your mortgage, do you think you still have the financial capabilities for your home loan plan? There are some home loan features that can demand some additional cost but a flexible home loan can pay off as time comes.
5. Match Your Goals with Your Home Loan Type
Carefully think and study the benefits of having principal and interest home loans versus a home loan with interest only. If you pay only interest, the benefits will be reduced repayments. This allows you to have bigger contributions for your property or home investment while it is growing in value with capital gains. On the other hand, a principal and interest home loan can help you repay your liabilities at the earlier time period and covers the total loan amount including the interest rates.