You may have been watching the news recently and noticed with interest (hee hee!) that interest rates have dropped to an almost unheard of 2.5%, dropping 25 basis points. This means that the interest rates of today, in 2013, are actually the lowest recorded interest rates since 1959.
So, what does that have to do with me, you might ask. Well, there's this thing called the "Australian Dream", the dream of owning one's own home. The advantages are numerous, including the ability to renovate at will, not having to keep shifting stuff from one place to another, and best of all, no inspections!!
But I digress.
What I actually mean is that this might just be a good time to get your first home loan and lock in a low interest rate with a building society with low interest rates like Newcastle Permanent. Customer service reviews show that they actually answer the phone when you call so you don't have to speak to a robot every time you call up. I appreciate that kind of attention to detail, it makes all the difference when you really want to get some information quickly.
At this point in time, you can get a fixed rate mortgage for your first home with a set period for the fixed rate of between 1 and 10 years. Or you can go for the variable option, depending on your requirements, it's a very personal thing so it's really up to you which way you go.
For first home buyers, you need around 5-10% deposit of the total purchase price, which is a sensible amount, and first home buyers may also be eligible for the first home buyers grant scheme. This grant provides a boost for anyone wishing to purchase their first home.
The site has a bunch of useful tools including a loan calculator and graph facility, to let you know what your rate and repayments would be over a chosen time period. You can choose from 10-50 year terms, although a lot of people tend to fall somewhere in the middle of these numbers, for example 25 years or so. It all depends on how quickly you want to pay off your home and how you can arrange your budget to do so.
For example, I tried out a hypothetical loan, $320,000 (which is a reasonable amount for a humble blogger such as myself), 10 year fixed rate home loan and a payment period of 25 years. The results are below:
I think I could manage that quite nicely. And I suppose if I can do it, there's a high
likelihood that you probably can too.
It's quite fun playing around with the options on the calculator. I estimated repayments on a 2,000,000 loan over 50 years, and then over 10 years. That's just how I roll.
You could try it yourself with figures that apply to your situation and see what the results are.
All in all, judging by the current interest rate situation, it is pretty clear that at this very moment in time, harking back to other golden era's in interest rates, now is probably one of the best time to set up your first home loan. After all, you only get two 1959s in a lifetime!