Let’s face it – a home loan is a long and expensive financial commitment that can be challenging and stressful at times. But once you own your property, you get to enjoy the lifetime benefits of becoming a homeowner.
In Australia, home loans make purchasing or upgrading properties easier and more reachable. If you’re still second-guessing, here are the 6 benefits of a home loan that will change your mind.
#1 Own your home sooner
Buying a home comes with a hefty price tag. But since home loans are not to be paid in one go, they make it easier for average Australians to afford a property. In 2021, the Australian Bureau of Statistics reported that 66% of households in Australia were homeowners, where 31% are without a mortgage while 35% are with a mortgage.
While it may typically take 25 to 30 years, there are ways to pay off your mortgage earlier.
Also, home loans are quite flexible with features and options that will help you become a homeowner faster.
You can even choose between principal and interest and interest-only loans. A principal and interest loan indicates that your repayments cover the principal cost (the amount you borrowed) and the interest (charged by your lender). On the other hand, if you choose an interest-only loan, you only pay the interest for an agreed period and then switch to paying the principal and interest.
#2 Secure your living
There’s nothing better than feeling secure that you have a roof over your head. When you rent, your landlord’s decisions dictate your living situation and stability. For instance, if your landlord decides to increase the rent or stop renting out their property, you face unexpected problems that take a toll on your present and future.
Plus, if you take out a home loan, your repayments go towards your own home instead of someone else’s property. You reap the benefits of your hard work. This makes it feel more rewarding because you invest in your future, so it doesn’t feel like your money goes to waste.
#3 Freedom to make decisions
Ever felt unsatisfied with the dull look of the place you rent out? How about the limited location of the available properties you can afford and your repayments? If you own your home, imagine the freedom you have to renovate, decorate or choose your dream home.
When you own your property, you have the upper hand to make the decisions instead of listening to your landlord. This means you get to unleash your creative side whether it be painting the walls with bright colours or choosing patterned tiles. No one can limit you.
Other than the freedom to make home renovations, buying a property also gives you more options for where you can live. This way, you can decide whether you want to buy a home near your work, in the city or the suburb.
But freedom doesn’t stop there. When you get a home loan, you also get to choose your loan term, repayment schedule (weekly, fortnightly or monthly) and loan type. For example, you can choose between a fixed rate or a variable rate loan.
A fixed rate home loan locks your interest rate for a certain period (usually 1-5 years), so you get peace of mind knowing how much your repayments will be. On the other hand, a variable rate loan gives you access to flexible features, including an offset account and redraw facility. So, you get to control your loan instead of just following your landlord.
#4 Own an expensive asset
A property is probably the most expensive purchase you make in your life. This means you get to own an expensive asset in the long run. Of course, as you make home improvements, your home may also increase in value, so you get a high-value return on investment.
Depending on your long-term goals, owning your home also gives you the option of using it as an investment property. Naturally, having an investment property means you generate rental income. Imagine retiring and not worrying about where you can get a source of income to sustain your living. Pretty nice, right?
#5 Build equity
Another benefit of a home loan is you can build up equity in your property. To put it simply, equity is the value of the property you already own. It’s the difference between your home’s current market value and your loan balance. Your home equity can increase when you make extra repayments or when your property’s value increases.
But there’s more. You can also borrow against your home equity. Now, this gives you a financial cushion in case of an emergency. On top of it all, you can use your home equity in many ways. For example, you can buy another property, renovate your home, buy a car or even fund your holiday.
If you’re unsure how to unlock your home equity, our trusted brokers are happy to help you out. You can always reach out to It’s Simple Finance for a FREE consultation.
#6 Get lower interest rates
While expensive, another benefit of a home loan that’s worth mentioning is they tend to come with lower interest rates. Why? A home loan is secured (a loan with collateral), so it’s subjected to lower interest rates compared to personal loans. For example, personal loans usually reach 15%-20% interest rates while home loans typically have 3.5%-7%.
Instead of paying a high interest rate on a personal loan to cover your dream home, getting a home loan will help you secure a lower interest rate that can potentially save you thousands in just months. Also, if it matches your situation, you can consolidate your debts into your home loan to better manage your loans and save on the interest you pay.
Want to enjoy the benefits of a home loan?
Home loans can be intimidating and stressful, but getting it right on your first try is empowering and rewarding.
Book your FREE expert consultation today for a stress-free home loan journey. Our trusted brokers will help you break down your best options, enjoy tailored choices from the top 40+ banks and lenders in Australia and get you the right loan to make your dreams happen.