PARENTS are seeing their children staying at home longer due to the difficulty that young people are experiencing in finding finance and saving for a home loan.
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While parents are looking to become empty nesters their children are facing a shortage in affordable housing.
Changes in the banking industry post Royal Commission has also seen the broker industry facing uncertainty.
Once young people get finance they need to be smarter about how they manage their loans.
Anita Marshall of Advanced Finance Solutions told News Of The Area, “There are a number of ways you can reduce the burden of your loan.
The number one on her list is to make payments weekly or fortnightly instead of monthly.
“By paying fortnightly instead of monthly the average home buyer cuts around 5 years off the term of their home loan.”
Effectively home buyers are paying more off their principal and reducing the interest burden through fortnightly payments.
Borrowers need to check if they are paying for features in their loan that they don’t need like offset accounts which incur can incur high annual fees and increased interest rates.
For those with savings of over $20,000 offset accounts can be worthwhile.
Similarly redraw facilities can make substantial savings while seeing borrowers able to access funds on an as needs basis.
“It’s important to get the most suitable home loan for your individual needs.”
Ms Marshall believes that after a loan is more than 2 years old, it’s quite possible that there are newer and more competitive products available to save you money.
Interest only loans can sound attractive however when you are paying off the principal you are gaining equity in the property.
“Borrowers can save through regular annual reviews of their loans, this doesn’t always mean refinancing, it could mean a simple phone call to the lender to switch products for a lower rate,” she said.
When interest rates drop borrowers should consider retaining higher repayments to further increase equity.
By Marian SAMPSON