Loans

Loans

Before you apply for a loan, it’s important to look before you leap. No matter what kind of loan you’re after, it’s important that you consider the fees and charges as well as the terms and conditions of all your options so you know exactly how much the loan is going to cost you.

Whether you’re in the market for a home loan, a credit card, a personal loan, there are some common questions to ask.

Know your limit

Home loans – chances are, this is the biggest financial commitment you will make.

“My first recommendation for smart and safe home loan borrowing is don’t over-extend yourself,” says Peter Switzer, founder of Switzer Financial Planning.

This logic applies to any kind of loan.

To work out how much you can borrow, there are plenty of online borrowing calculators – simply visit your bank’s website to get an idea of your basic figures.

“Use these calculators, face the truth and don’t ignore their suggestions,” says Switzer.

Keep your debt manageable

Too many loans does not a happy lender make.

“I put some figures into a home loan calculator and assumed a monthly income of $8000 a month with no other loans to pay back. The calculator told me I could borrow $680,000 and my repayments would be $5154 a month. The interest rate I used was 8.2 per cent.

“But get this – by simply throwing in a $300 a month car loan, the amount you could borrow falls to $625,000 and the amount you repay per month tops out at $4906.

“These calculators are based on what lenders have learnt from historical data and it says you don’t want to be earmarking much more than 60 per cent of your income for loans.”

Shop around

“Once you’re certain how much you can borrow, go out and get a great loan,” says Switzer.

To make sure you’re getting the best of the loans available, there are plenty of comparison tools to help you get the best rates.

Switzer expert Andrew Willink’s RateCity.com.au is a must-visit for anyone in the market for a loan of any kind – car insurance, credit cards, home loans, person loans, and so on. Here, you can search, compare and apply for the loan that best suits you.

Do your homework

Once you know you’re getting the best deal, make sure you’re across all the terms and conditions. There are some common traps for first-time players when it comes to loans – such as a honeymoon home loan rate, which is usually followed by steep fees and charges.

“Loans are a big deal,” says Switzer.

“And I reckon most of us don’t do enough homework before we sign up for a loan.”

If you need help, speak to a financial planner.

So if you do your homework, there’s a lot of money you can save in the wide world of loans.

+ Show more

Credit cards – how to keep in control

Credit cards are a threat to long-term wealth, and in this article, I’ll give you a present by providing a lesson or two about how to get the best out of these pesky cash crushers. Some people actually use these cards to... read more >

Home loans – your questions answered

Home loans – more often than not, this will be the biggest financial commitment in your life. Below, Peter Switzer, founder of Switzer Financial Services answers some common questions. Can’t cop a rate rise I am thi... read more >

Loans

Free Switzer Newsletters

Switzer Services

More Information

Site Content